Iberdrola 9-month Profit Down, Revenues Rise; Upgrades FY25 Outlook

Iberdrola SA reported a 3% decline in nine-month net profit to €5.31 billion, primarily due to the absence of prior year's capital gains and the sale of smart meters, though adjusted net profit rose 16.6% to €5.12 billion, driven by strong growth in its Networks division. The Spanish utility upgraded its fiscal 2025 adjusted net profit guidance to double-digit growth exceeding €6.6 billion, attributing this to enhanced operating results and cash flow from increased investments in UK and US Networks. Concurrently, the company proposed an 8.2% increase in its interim dividend to €0.25 per share, signaling confidence in its financial strength and strategic plan execution.

Analysis

Iberdrola SA reported a 3% decline in nine-month net profit to €5.31 billion, primarily attributed to the absence of prior year's capital gains from asset divestments and the contribution from smart meter sales. However, the company's adjusted net profit significantly increased by 16.6% to €5.12 billion, indicating robust operational performance. Revenues also saw a modest 2.3% growth, reaching €33.86 billion.

The strong adjusted performance was largely driven by the Networks division, which propelled adjusted EBIT up 5.9% to €7.78 billion and adjusted EBITDA up 4.4% to €12.06 billion. This operational strength, stemming from increased investments in UK and US Networks, led Iberdrola to upgrade its fiscal 2025 adjusted net profit guidance to double-digit growth exceeding €6.6 billion, a notable increase from its previous general double-digit expectation.

In a clear sign of confidence, the Board of Directors plans to propose an 8.2% increase in the interim dividend, raising it to €0.25 gross per share. This positive financial update and enhanced outlook were well-received by the market, with Iberdrola shares gaining approximately 1.8% on the Madrid Stock Exchange following the announcement. The company emphasizes this growth aligns with its 2025-2028 strategic plan.

Key Decisions for Investors

• Investors should focus on Iberdrola's adjusted net profit growth and the continued strong performance of its Networks division, as these are key drivers of the upgraded guidance and dividend policy.
• The proposed 8.2% interim dividend increase signals management confidence; investors should assess the sustainability of this capital return policy in future periods.
• Given the company's alignment with its 2025-2028 strategic plan, investors should track progress on investment initiatives and their impact on future earnings and cash flow.