Iberdrola S.A., Spain’s largest power utility, saw its net income rise to 6.6 percent in the six months to June after cutting operating costs, acquiring companies to improve and expand its operations, and increasing its renewable energy output.
Profit at the Bilbao-based utility reached 1.564 billion euros ($2.25 billion) in the first half of the year compared with 1.467 billion euros in the same period last year. Its revenues were up 1.5 percent to 15,550 million euros.
Profits were driven by the strong performance of the company’s operations in regulated markets which helped offset the losses in its deregulated businesses such as those in Spain and Britain affected by decreased energy demand and financial environments that went sour.
Earnings before interest, taxes, depreciation and amortization of its regulated business stood at 1,892 million euros, an 18.4 percent improvement over last year. In comparison, its liberalized business affected by higher taxation rates in Spain, lower electricity and gas sales in Britain and sold assets in Guatemala pulled its Ebitda down 14.7 percent to 1.29 billion.
The company said these were some of the factors why it decided to optimize operations and went acquiring assets it found essential for improving the firm. For the first half of the year, Iberdrola managed to reduce its net operating costs by 3.2 percent.
In January, Iberdrola acquired energy company Elektro from Britain’s Ashmore Energy International for $2.4 billion to better penetrate the Brazilian energy market. The incorporation of Elektro contributed 80 million euros in just two months, the company said.
Elektro has operations in the states of Sao Paulo and Mato Grosso, supplying more than 11,500 gigawatt hours in 2010 to 2 million customers.
It also announced in March it would absorb its renewable energy arm, Iberdrola Renovables, in which it already holds 80 percent.
As a result of increased business activity and higher efficiency, Ebitda rose 4.4 percent to 4 billion euros, which Iberdrola said was the first time in a 6-month period for the utility.
“The international expansion has led the group to be present in more than 40 countries and to diversify its businesses to the more deregulated markets and best placed to take advantage of economic recovery,” Iberdrola said in a statement.
“In the light of these results, the company reaffirms positive prospects for 2011 and 2012,” it added.
From share prices of 5.697 euros when Madrid trading closed in July 20, Iberdrola’s shares rose 2.89 percent and closed at 5.862 euros in July 21 when the half-year financials was announced.
Renewables boon
Increased wind energy and other renewable energy sources in the United States and elsewhere also helped boost revenues and profits in the first six months of 2011. Operating profits from renewables were 785.1 million euros, 11.1 percent up on the first six months of last year due to new capacity.
Out if the 74,591 million kilowatt-hours it generated in the first half of 2011, Iberdrola sourced 20.1 percent of it or 15,017 million kWh from renewable energy. This is 16.8 percent more than what was registered in the same period last year.
Iberdrola said it was the first time renewables exceeded the power output coming from nuclear plants, or 16.4 percent of the total equal to 12,258 million kWh, and hydropower with 10,727 million kWh accounting or 14.4 percent. Wind power remains as Iberdrola’s core renewable business, contributing 97 percent of total renewable generation.
Combined cycle gas plants produced 27,952 million kWh, making up the largest amount with 37.5 percent of the total. The utility said that 51 percent of the energy it generated was carbon dioxide emission free.
The utility have increased its installed renewable energy capacity by 13.8 percent to 12.97 MW within the period. New installations include 900 MW added in the United States, 275 MW in Spain, 176 MW in Britain and 226 MW in other European countries and Latin America all added within the last twelve months.
As a result of its diversification strategy of entering other markets, around 55 percent of Iberdrola’s renewable energy capacity is now outside Spain, according to a statement.
Overall, Iberdrola’s total capacity is 45,333 MW. Combined cycle power represented 29.1 percent of total capacity, renewable energy with 28.6 percent, hydroelectricity with 21.4 percent, nuclear at 7.4 percent and fuel oil at just 0.3 percent.
Around 7,015 MW of Iberdrola’s overall generating capacity is found in Britain, followed by Latin America with 5,852 MW. The United States accounted for 5,769 MW and another 1,166 MW in the rest of the world. In Spain, the utility’s capacity was 25,530 MW.
