Iberdrola achieves a record profit and proposes the highest dividend in its history

Iberdrola achieved a profit of 4,339 million euros in 2022, with a growth of 11.7%, the highest in the history of the Spanish company chaired by Ignacio Sánchez Galán. This figure is more than it estimated a year ago (between 4,000 and 4,200 million) and about 100 million more than analysts expected.  

Thanks to these results, the electricity company is proposing a dividend of 0.49 euros per share, the highest in its history since it went public, equivalent to around 3.16 billion euros.  

The electricity company has managed to exceed expectations and achieve these results thanks to growth in the United States and Brazil, offsetting the fall in its business in Spain due to "regulatory and fiscal measures" and the slowdown in Mexico. As a result, the utility's profits grew in all its markets except Spain, where they fell 19% "due to regulatory and tax measures and increased costs that the company has not passed on to customers". The fall in hydroelectric generation due to the drought also had an impact. On the other hand, business in the US and Brazilian markets has been successful, compensating for the slowdown in activity in Mexico.  

The Spanish company will distribute 73% of profits to shareholders, a pay-out that is higher than that of any Ibex 35 company, and close to the maximum allowed by the Shareholders' Meeting, which left the ceiling at 75%, with a minimum of 65%, as reported by Merca2.  

The company offers flexible dividend payments, giving shareholders the choice between cash or shares in the electricity company. Lately, the vast majority of shareholders prefer to receive the dividend in shares. Of the 0.49 euros per share, 0.18 euros are gross per share and the other 0.31 euros will be paid if and when confirmed by investors. This new remuneration means a 6% increase compared to the dividend paid in 2021.  

In addition to this good news about the company's profits, there are other good data that make analysts highlight the positive progress of Iberdrola. IG Markets estimates that Iberdrola has increased its investments by 13% to 10,730 million euros.  

Of the total investments, 46% went to the renewables sector. Clean energies are key for Iberdrola. This was explained by Ignacio Sánchez Galán, the electricity company's chairman, who spoke at the World Economic Forum in Davos in January to explain the measures that urgently need to be taken to stop depending on fossil fuels such as oil and gas and to achieve energy security based on clean energy.  

Iberdrola presented the report entitled "Electric, Together" in Davos as a message to global policy makers, companies in the energy and industrial sectors and other economic and social actors, based on the challenges that remain to be solved in the energy transition and which seeks to explain how this process can be carried out in the most efficient way.  

Iberdrola explained that it will invest 47 billion between 2023 and 2025 to improve the energy system in the United States, Europe, the United Kingdom, Latin America and Asia-Pacific. 

For the company, the five fundamentals for moving rapidly towards green energy security are accelerating the deployment of smart grids, accelerating renewable generation projects, expanding the use of green hydrogen as a solution for hard-to-decarbonise industries, greater innovation to drive climate solutions, and not losing sight of the long-term goal of decarbonisation. 

"The harsh reality is that the world continues to rely on fossil fuels to meet nearly 80% of its energy needs, exposing us all to unnecessarily high levels of uncertainty, inflation and pollution. Every day that the world fails to act, its citizens and businesses remain trapped by international energy volatility and the window for tackling climate change closes," explained Ignacio Galán. 

In terms of the latest investment effort, Iberdrola has made a gross investment of 2,908 million euros in Spain, 27% of the total, and 70% of the capital injected in the EU, which amounts to 4,124 million euros. After Spain, the United States was the second destination, with 2,658 million, 25% of the total. Latin America received 20%, with 2,115 million. 

Liquidity is good at the electricity company, but it is suffering from the growth of its debt. Iberdrola's accounts show an increase in financial debt of almost 12%, to 43,749 million euros, with a leverage of 42.8%, one point more than in 2021, and a debt to equity ratio of 76%, six points more than the previous year. Meanwhile, liquidity is good, with 23,530 million euros.  

Meanwhile, the energy crisis has not affected the company, as evidenced by the 1.1% increase in the number of customers to 10.88 million in the electricity sector, offsetting the drop in the gas sector, which suffered a 6% decline to 1.35 million customers. 

Iberdrola will fight in court against the extraordinary tax imposed by Pedro Sánchez's government. For the time being, it will pay around 200 million euros for a tax that has been established for banks and energy companies with revenues of more than 1 billion euros per year. The electricity company said that it has appealed the payment of this tax for the alleged violation of European law and "hopes to win" this legal dispute. "We have appealed against these measures because they are arbitrary and discriminatory and only affect some sectors that are not in a comparable situation," said the company's head of legal services, Gerardo Codes, as reported in the newspaper El País. Codes said the measure is contrary to EU law and that 2024 will be a key year for the courts' response: "We consider this tax to be in breach of European law and we do not expect a decision from the courts this year, probably next year," Codes said.