Iberdrola lifts 2028 profit outlook, boosts investment plan to €58 bln

Iberdrola unveiled an expanded investment plan of €58 billion gross for 2025-2028, a significant increase from its prior €41 billion plan, with €36 billion allocated to networks and €14 billion to renewables. The Spanish utility projected adjusted net profit to reach approximately €7.6 billion by 2028, surpassing analyst consensus, despite its €18 billion EBITDA forecast for 2028 falling slightly below expectations. This strategic capital deployment, coupled with a maintained 65-75% dividend payout ratio and expected regulated asset base growth to €70 billion, signals a robust long-term growth trajectory.

Analysis

Iberdrola (IBE) has outlined an accelerated growth strategy through 2028, centered on a substantial increase in capital investment to €58 billion gross (€50 billion net) for the 2025-2028 period. This represents a significant step-up from its previous €41 billion plan for 2024-2026. The capital allocation reveals a strategic pivot towards regulated assets, with networks designated to receive approximately €36 billion, a marked increase that underpins the projected growth of the regulated asset base to €70 billion by 2028 from €49 billion in 2024. While the guidance presents a mixed financial picture, the projected 2028 adjusted net profit of approximately €7.6 billion surpasses consensus estimates of €7.25 billion, even when accounting for a €100 million contribution from a UK accounting change. Conversely, the 2028 EBITDA forecast of €18 billion falls short of the market consensus of €18.91 billion, suggesting potential pressure on margins or a more conservative outlook on operational earnings. Shareholder returns are reinforced with a stable dividend payout ratio of 65-75% and a newly established dividend per share floor of €0.64, providing enhanced predictability for income investors.

Key Decisions for Investors

• Investors should view the strategic pivot towards regulated networks, funded by an increased €58 billion investment plan, as a key positive that enhances long-term earnings visibility and stability.
• The conflicting guidance, with a 2028 net profit forecast of €7.6 billion beating consensus while the €18 billion EBITDA target misses expectations, warrants a closer analysis of projected margins and cost assumptions in valuation models.
• For income-focused portfolios, the reaffirmed 65-75% dividend payout ratio, combined with a new firm floor of €0.64 per share, offers a secure and predictable income stream supported by the company's de-risked growth in its regulated asset base.