Ignacio Galán, Chairman of Iberdrola

Iberdrola has launched an investment plan of 75,000 million euros for the period 2020-2025, with the aim of anticipating and taking advantage of the opportunities of the energy revolution faced by the main economies of the world. 90% of this investment volume -68,000 million euros- will be organic and will be aimed at consolidating its business model, based on more renewable energy, more networks, more storage and more intelligent solutions for its customers. The rest, 7,000 million euros correspond to the recently announced acquisition of the American company PNM Resources. This unprecedented rate of investment will represent an average investment of 10 billion euros per year, between 2020 and 2022, and 13 billion euros per year in the period 2023 and 2025.

Iberdrola's investment strategy -together with its efficiency policy- will allow it to continue recording profitable growth during the period, while maintaining financial strength and remuneration to its shareholders. The group expects to obtain a gross operating profit (EBITDA) of 15,000 million euros by 2025, which means an increase of 5,000 million euros that obtained in 2019, registering an accumulated average annual growth of 7%. Net profit, for its part, would rise to 5,000 million euros, after growing annually during the period between 6% and 7%.

The presentation of the forecasts for 2025 has been used to carry out an upward revision of the group's prospects for 2022, despite facing the COVID-19 context. And thus, the net profit in 2022 will be in the range between 4,000 million and 4,200 million euros, compared to the 3,700-3,900 million expected for that year in the 2018-2022 plan. Gross investments will rise by 35% and will reach 50,000 million -of these, there will be 36,000 million in the period 2020-2022-, compared to the 38,000 million expected, and efficiencies will rise to about 1,600 million, exceeding 1,200 million of euros provided for in the previous plan and maintaining the rating at BBB + / Baa1 levels.

CREATION OF VALUE AND OPPORTUNITY FOR INDUSTRY AND EMPLOYMENT

The investment program promoted by Iberdrola for the next six years, the largest for a Spanish company, will contribute to the revitalization of the industrial fabric and employment in the countries where the group operates.

This was explained by the Chairman of Iberdrola, Ignacio Galán, in the presentation of the 2020-2025 Plan: “Our business model, after 20 years anticipating the energy transition, places us as a key driving agent in the transformation of the industrial fabric, promoting with our experience, social commitment and financial capacity, a model of long-term sustainable economic growth capable of facing the current challenges of society”.

Iberdrola will maintain the social market economy and the 2030 Agenda of the United Nations as the axes of its activity, and the investments and purchases of goods and services from its more than 22,000 suppliers will contribute to the maintenance of around 500,000 jobs in 2025 in the world. Likewise, it foresees about 20,000 new hires in the group during the same period - by 2022, there will be more than 10,000 hires and it will promote the creation of up to 30,000 jobs.

The company, which only in 2019 contributed 8.2 billion euros to the taxation of the countries where it operates, expects its tax effort to increase in 2025, to 12 billion euros, with the annual average for the period [2020-2025] being 10.3 billion euros, a consequence of the increased activity involved in the development of the new plan.

In a scenario of investment growth, shareholder remuneration will increase in line with the results and a growing floor of between 0.40-0.44 euros per share is established by 2025. The group will continue executing its 'Iberdrola Flexible Retribution' program with their corresponding buyback programs, which avoid shareholder dilution. The dividend policy is maintained and places the 'pay out' between 65% and 75%.

OPPORTUNITY FOR INDUSTRIAL FABRIC AND EMPLOYMENT

• Investments aimed at leading the energy transition. Gross investments in the next six years [2020-2025] will amount to 75,000 million euros and 90% -68,000 million- will be organic. More than half of the organic growth (51%) will go to renewables and 40% to networks.
• 60% increase in investments in Spain. They will reach almost 14,300 million euros, 21% of the group's total. More than 7,000 million will be allocated to renewables and, to networks, more than 4,500 million euros.
• Employment creation. Maintaining the axes of the social market economy and the United Nations 2030 Agenda, investments and purchases of goods and services from its more than 22,000 suppliers will contribute to sustaining around 500,000 jobs in 2025 in the world. Likewise, about 20,000 new hires are expected in the group during the same period. The company reinforces its commitment to training, with an increase in the hours per employee, which are already 4 times the European average.
• Tax contribution and effort. The company, which in 2019 alone contributed 8,200 million euros to the taxation of the countries where it operates, expects its fiscal effort to increase in 2025 to 12,000 million euros, with the annual average for the period [2020-2025] being 10,300 million euros, a consequence of the increased activity involved in the development of the new plan.
• Investments focused on countries with climate ambitions and A rating. The United States and the United Kingdom account for 34,000 million euros of investment, 50% of the total. The commitment to other international areas is growing, with investments of more than 11,000 million euros. 83% of the investments are directed to countries with an A rating.
• Renewable capacity doubles. It will reach 60 GW in 2025, compared to 32 GW in 2019. At the end of the period, the clean energy park will be distributed between onshore wind (26 GW), offshore (4 GW), solar (16 GW) and hydroelectric, both traditional as well as storage (14 GW).
• Commitment to the environment, carbon neutral in 2030. With CO 2 / kWh emissions that are already two-thirds lower than the European average, the investment strategy in clean energy and networks will lead Iberdrola to be a “neutral in carbon ”in Europe by 2030 and to reduce its global CO 2 emissions by 86% to 50g / kWh by the end of the decade. As an additional contribution, the company will plant 20 million trees by 2030; 8 million by 2025.
• The networks, as a key factor in the electrification of the economy and dynamization of the territories . The planned investments in networks will exceed 27,000 million euros by 2025 and the regulated asset base will reach a value of 47,000 million euros in 2025, after multiplying by 1.5 times compared to 2019.
• Smart, digital and innovative solutions for clients. The company will raise to 60 million the contracts with clients in the world by 2025, to whom it will offer intelligent and innovative solutions in the residential field - energy storage and heat pump, self-consumption and electric mobility - and industrial - smart solutions , electrification and green hydrogen-.
• Green hydrogen, a strategic vector for the industry. In line with the European recovery plans, it foresees the installation of 600 MW in operation in 2025 - it will be 800 MW by 2027 together with Fertiberia-. The first projects in Spain - in 2021 the first MW will be installed - will be completed with initiatives in other countries, while leading the development of the value chain and alliances with more industrial groups.

HALF OF THE ORGANIC INVESTMENTS, TO RENEWABLES, MAINLY IN SPAIN, UK AND US

AIberdrola's historical investment plan for the 2020-2025 period will be aimed mainly at renewables - it will represent more than half (51%) of organic investments, some 34,680 million euros - and to networks, which will account for 40%, about 27,200 million. The customer area will receive 9%.

The investments are focused on countries with climatic ambitions and rating A. To Spain will be destined about 14,300 million euros of investment - they are 21% of the group's total and represent an increase of 60% compared to the previous plan. In this market, more than 7,000 million will go to renewables and, to networks, more than 4,500 million euros.

The United States and the United Kingdom, for their part, account for 34,000 million euros of investment, 50% of the total. The commitment to other international areas is growing with investments of more than 11,000 million euros. Of the total, 83% of the investments are directed to countries with A rating, in line with the company's strategy of betting on these types of markets.

Investments in renewables will allow Iberdrola to reach 60 gigawatts (GW) in 2025, after reaching 44 GW of installed capacity in 2022. This will mean doubling its current power, giving a great boost to offshore wind technology, with 4 GW at the end of the period, a technology that contributes 5 times the EBITDA / MW compared to photovoltaic solar energy and 3 times the onshore wind energy. Iberdrola's commitment will also allow it to grow in solar photovoltaics, with a forecast of 16 GW installed at the end of the period and reinforce its leadership in onshore wind and hydroelectric power, with 26 GW and 14 GW installed in 2025, respectively.

To materialize the plan, Iberdrola starts from a unique position, with one of the largest renewable portfolios in the industry; a total of 70.5 GW distributed throughout its traditional areas - reinforced this year and with new markets such as Australia, Japan and Sweden - and main technologies: 30.7 GW are photovoltaic; 20.2 GW, offshore wind and 16.3 GW, onshore. Currently, the company is progressing in the construction of 7 GW and would have up to 11 GW under execution in 2025.

KeyFacts Energy: Iberdrola Energy Spain country profile