Iberdrola’s first half net earnings came to €1,503.1 million, down 13%, while Ebitda was in line with the same period last year at €3,744.7 million. Solid business performance, especially international businesses, again mitigated the negative impact of regulatory and fiscal measures in Spain which came to €369 million at gross margin level during the period.
Taking into account regulatory changes since 2011 the accumulated negative impact on 2014 results as a whole will be a gross €1,395 million. The impact in Spain was partially offset by a more efficient generation mix, good performance from gas businesses and a 3.5% rise in production to 73,062 gigawatt hours (GWh).
Gross margin was in line with the same period of 2013 at €6,170.8 million (down 0.8%). Group Ebitda totalled €3,744.7 million, of which 66% came from regulated businesses. Excluding the negative impact of exchange rate fluctuations, Ebitda would have risen 0.7%.
Net operating expenses were 4.2% higher at €1,689 million, due to higher costs in the second quarter reflecting increased activity in the UK and other non-recurring costs which Iberdrola expects to be mitigated in the second half of the year through operating efficiency measures. Levies came to €737.1 million, 13.7% lower, of which 60% or €449.6 million correspond to Spain.
As a result, net Group earnings for the six months declined 13%, reflecting both the impact of regulatory decisions in Spain and also a non-recurrent balance sheet adjustment for Spain activities in the first half of 2013 under Law 16/2012.
Operating cash flow (FFO) came to €2,855.7 million, down 3.9%, and exceeded investments among all Group businesses which came to a net €1,199.0 million. The bulk of this was allocated to international networks and renewables businesses.
First half results conform to IFRS 11 accounting norms, by which businesses consolidate by the equity accounting method instead of the proportional method utilized previously.
These results, as well as prospects for the second half of the year enable the Group to confirm its projections both for this year and also the 2014-2016 period. Group activities are founded on three pillars: a business portfolio centred on regulated businesses and geographical diversification; an investment strategy based on security, profitability, execution periods and cash flow generation; and thirdly on sustaining financial strength by reducing debt, improving solvency ratios and controlling interest rate and exchange rate risk.
Thereby, and despite an uncertain and changing business environment, the Company has been able to achieve positive results and maintain shareholder remuneration: a €0.144 gross payment per share in a new edition of the Iberdrola Flexible Dividend plan, plus the €0.126 gross per share paid in January. With the €0.005 per share AGM attendance bonus the total remuneration comes to €0.275 per share.