Iberdrola Posts Higher Adjusted Profit on UK Power Growth

Iberdrola on Wednesday reported EUR 1.87 billion ($2.18 billion) in net profit adjusted for nonrecurring items for the first quarter (1Q), up 11.4 percent from the same three-month period last year.

The increase was mainly due to electricity distribution in the United Kingdom growing 72.6 percent to 14,687 gigawatt hours (gWh), according to the Spanish power and gas utility's quarterly report.

Power and gas distribution, which comprises Iberdrola's "networks" segment, generated EUR 5.65 billion in revenue for the January-March 2026 quarter. While that was down 2.6 percent year-on-year, driven by a 19.9 percent decline in the U.S., UK contribution increased 23.9 percent to EUR 715.3 million.

"Gross margin for the Networks business in the UK increased by 24.7 percent (30.2 percent in local currency) and stood at EUR  698.7  M, due to the contribution of ENW's distribution business, effective from March 2025, together with the greater contribution of the Transmission business", Iberdrola said.

"[UK networks] EBITDA grew by +26.4 percent to EUR  513.5  M (32.0 percent in local currency), with Net Operating Expenses of EUR  141.3  M, increasing by 22.0 percent (+27.4 percent in local currency) due to higher personnel and external services expenses, affected by the incorporation of ENW".

Distributed electricity increased 9.7 percent to 68,645 gWh. While the UK led power distribution growth, Spain remained Iberdrola's biggest distributed power market accounting for 23,462 gWh. Spanish power distribution increased 0.7 percent.

Iberdrola's gas distribution, in the U.S., fell 5.5 percent to 25,582 gWh.

"Networks business EBITDA decreases by -15.2 percent up to 2,047.5 M EUR, increasing by 8.6 percent in adjusted terms, excluding the recognition of costs incurred in prior years in the United States (EUR 530 million) in 2025. This improvement is driven by the larger regulated asset base (+8 percent), strong growth in the United Kingdom fueled by higher investments and the consolidation of ENW (UK), as well as positive performance and the increase in the investments and rates in United States", Iberdrola stated.

Revenue across operations fell to EUR 12.02 billion for 1Q 2026 from EUR 12.58 billion for 1Q 2025 as the other segment besides networks - "power and customers" - also declined to EUR 6.44 billion.

In the power and customers business, which involves power and gas retail, revenue dropped 23.3 percent in the U.S., 7.5 percent in the UK and 5.4 percent in Spain but increased 6.7 percent in Brazil.

Net generation increased 1.6 percent to 36,106 gWh, including 25,620 gWh from onshore wind-led renewables. Installed capacity expanded 3.8 percent to 58,877 megawatts (MW) with renewables increasing 4.9 percent to 46,741 MW.

"Excluding the negative impact of exchange rates (EUR -47 M) adjusted EBITDA decreases by only 1 percent. This decrease is due to the fact that higher production in the United Kingdom (+41 percent) and continental Europe (+32 percent) did not offset non-recurring extraordinary regulatory impacts or higher ancillary services costs in Iberia", Iberdrola said.

"In addition, performance in the United States is affected by non-recurring positive impacts recorded in the first quarter of 2025".

Total net income was EUR 1.71 billion, or EUR 0.244 per share - down from EUR 2 billion for 1Q 2025. The fall reflected "effects arising from the thermal assets transaction in Mexico in 2024 (EUR +65,9 M) and the impact of 'capital allowance' in the United Kingdom (EUR +87.8 M)".

Adjusted EBITDA across operations increased 2.4 percent to EUR 4.07 billion thanks to the networks segment.

Funds from operations (FFO) increased 7 percent to EUR 3.28 billion driven by better networks cash generation. The year-on-year comparison excluded contributions to 1Q 2025 and 1Q 2026 from Mexico, which Iberdrola exited April 2026 in a $4-billion sale to fellow Spanish company Cox Abg Group SA.  

Iberdrola has earmarked EUR 4.5 billion in dividends for 2025, a 12 percent increase, subject to shareholder vote.

That includes a supplementary dividend per share of EUR 0.427, totaling EUR 2.8 billion, that the board will propose at Iberdrola's general meeting May 29. The other part of the total dividend consists of an interim dividend per share of EUR 0.253 paid last February, totaling EUR 1.7 billion.

Additionally the board is proposing an engagement dividend of EUR 0.005 per share if the quorum at the meeting reaches at least 70 percent.

Iberdrola exited 1Q 2026 with EUR 4.87 billion in cash and cash equivalents. Current assets stood at EUR 24.44 billion.

Current liabilities totaled EUR 29.75 billion including EUR 12.67 billion in finance debt. "Adjusted FFO financial ratio to adjusted net debt stands at 24.0 percent and the current liquidity position amounts to EUR 21,439 M covering 23 months of financing needs", Iberdrola said.

To contact the author, email jov.onsat@rigzone.com