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Iberdrola May Invest 16 Billion Euros Through 2012

Iberdrola SA, Spain’s biggest electricity company, said net investment from 2010 through 2012 may total 16 billion euros ($22 billion) as it spends more on renewable-energy projects and networks.

Gross investment may climb to 18 billion euros, while asset sales may raise as much as 2.5 billion euros through 2012, Iberdrola said today in a filing. The utility targets average annual growth of 5 percent to 9 percent in profit excluding one- time items and in earnings before interest, tax, depreciation and amortization from 2009 through 2012.

“The diversification strategy that has been followed has provided the group with a portfolio of businesses and geographies that creates a wide range of growth options,” Chief Executive Officer Jose Ignacio Sanchez Galan said today on a conference call.

Almost two-thirds of Iberdrola’s planned gross investment will be in the U.S. and the U.K. The Bilbao-based company already generates more than half its electricity outside Spain after expanding abroad to reduce reliance on the domestic market, where demand dropped last year. Its renewable-energy division is the world’s largest owner of wind parks.

U.S. Wind Growth

The U.S. market has a “massive wind-power potential,” the utility said in a presentation. Wind turbines accounted for 42 percent of all new generating capacity in the U.S. in 2008, almost matching the additions of gas-fueled plants, the American Wind Energy Association said in April.
Iberdrola has no plans for a U.S. stock market listing at the moment, Galan told reporters in London today.

Iberdrola closed unchanged at 5.90 euros in Madrid. The stock has dropped 12 percent this year, valuing the company at 31 billion euros.
Iberdrola’s net investment last year was 2.06 billion euros, the company said in the presentation. The utility has a “flexible approach to investment” and has only committed to spend 9.6 billion euros of the estimated 16 billion-euro net investment through 2012, it said. Iberdrola also aims to reach annual cost savings of 300 million euros by 2012.

The planned asset sales follow Iberdrola’s acquisitions of U.S. utility Energy East Corp. in 2008 and Scottish Power Ltd. in 2007.
Yesterday, Iberdrola said it sold a 2.7 percent stake in Portuguese utility EDP-Energias de Portugal SA for 298 million euros, following the sale of its 15.7 percent interest in Petroceltic International Plc in January. Iberdrola ended last year with net debt of 24.9 billion euros.

Earnings Fall

Net income dropped 1.3 percent to 2.82 billion euros last year on lower earnings from asset sales, Iberdrola said today. Electricity demand in mainland Spain fell 4.6 percent in the period, power-grid operator Red Electrica Corp. SA said Dec. 30.

Iberdrola’s installed capacity totals 43,667 megawatts, of which gas-fired plants account for 30 percent, renewable energy 25 percent and hydropower stations 23 percent.

Iberdrola Renovables SA, the utility’s alternative-energy unit, aims to increase its installed capacity to 12,500 megawatts by the end of this year and 16,000 megawatts by 2012. Renovables yesterday said full-year profit fell 4.9 percent to 371.1 million euros on lower power prices in Spain and higher financing costs.