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Iberdrola Renovables Posts 37% Increase in 1Q Profit

Renewable energy developer Iberdrola Renovables (IBR.MC; IRVSF.PK) posted net profit of EUR 156 million for 1Q10, up 37.3% from the same period last year.

The growth was underpinned by the geographical diversification of the company, which the company says mitigated the uneven performance of its businesses worldwide, and also by increased production and capacity, improved price levels, and exchange rate factors.

The company, which is the world's largest wind power developer, benefited from rising prices in all wind markets and increased output in Spain.

EBITDA advanced 30.4% to EUR 441 million, driven by an improved performance in the wind business, which contributed EUR 80 million more than in the same period last year.

Electricity generation grew by 26.2% to 6,812 million kilowatt hours (kWh), underpinned by increases in Spain (35.8%), the US (+20.7%) and the rest of the world (+41.5%). Wind energy remained the bedrock of the company’s business throughout the first quarter, accounting for 97% of output. Operating capacity totalled 10,789 megawatts (+22.1%, +1,951 MW) and installed capacity stood at 11,294 MW (+17.4%).

Over 50% of total capacity is now situated outside Spain as a result of the company’s strategy of diversifying its generation assets in the most promising markets. Efficiency continued to improve, with a 6% reduction in operating costs per megawatt of capacity, the company said.

Moreover, Iberdrola Renovables has strengthened its financial position, with total assets of close to €23 billion and gearing of 27.9%, one of the industry's lowest ratios.

The commissioning of around 1,000 MW of new operating capacity in the US made Iberdrola Renovables the fastest-growing player in the US market in the last 12 months. The company plans to install 1,000 MW per year in the US in 2011 and 2012.

Over 93% of the company’s estimated output in 2010 is already sold. IBERDROLA RENOVABLES plans to invest €9 billion over the 2010-2012 period to boost its international expansion and bolster its position as the global leader in wind power. Most investment will be carried out in the countries with the most stable and predictable regulatory frameworks, especially the US (€4.9 billion) and the UK (€1.9 billion).

At the start of 2010 the company created an Offshore Business Division in Scotland to channel the development of the large volume of marine wind energy projects awarded to the company. These amount to around 10,000 MW worldwide and include the rights (in partnership with Vattenfall) to build one of the world’s largest offshore wind farms in the UK--7,200 MW--capable of supplying five million households. The company also has an additional 2,300 MW under development in the UK including the 500 MW West of Duddon Sands wind farm (developed in partnership with Dong), construction of which will start in 2012.

The UK government’s objective is installed capacity of between 20,000 and 30,000 MW for this technology by 2020; Iberdrola estimates that it will secure a 15% share of this capacity. Through its subsidiary, ScottishPower Renewables, the company is now the leading developer and generator of onshore wind energy in the country, with 802 MW (+14% compared with 1Q09), and operates the largest wind farm in Europe, Whitelee in Scotland.

Website: www.iberdrolarenovables.es

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