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Don’t Be Seen Not Bein Green

29 April 2020 by jbchevrel

Iberdrola (IBESM) is the #1 Spanish utility and clean energy group. They delivered a relatively solid set of Q1 results. Net profit E1.0B was up +5% driven by growth in renewables. Profit up despite Sales down. EBITDA came up +6% to E3B, broadly in line with the consensus. At the EBITDA level, G&S and Renewables have been slightly offset by a -5% decline in Networks. Despite the impact of the pandemic, IBESM has been maintaining their FY profit outlook. EBIT came E1.6B, +0.8% y/y while sales came E9.4B, -7% y/y. Q1 Adj. Despite the impact of the pandemic, it is worth noting that IBESM has also maintained their dividend outlook. Net debt has increased to €38B although LFL FFO/debt improved from 20.4% as of Q1-19 to 21.5%. Still in European utilities, Orsted (Danish wind power) reported an even more impressive +27% rise in Q1 profit and also unchanged guidance for the year. That contrasts with many fossil fuel focused companies, in trouble. The good thing for renewable producers is that in most electricity systems, grid operators are obliged to buy clean energy before buying anything else. So even though power demand has declined during lockdowns (mostly due to the industry, as opposed to households). Gas and coal plants have got hit vs renewables. We close IBESM 5y CDS at 40bp and ORSTED 5y CDS at 55bp. Time to press send and listen to Powell.