While economic conditions fluctuate, Iberdrola continues to weather them with panache. In its renewables segment, where the group already maintains 45GW of capacity, mainly in wind power, all is still going well: returns on investment are clearly positive, and the withdrawal of major European competitors such as Shell, BP and Orsted is opening up new prospects.
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In its networks segment, the heart of its expansion strategy, the Spanish company remains on the offensive. This summer, the Group completed the purchase of the British company North West, under the nose of Engie. The deal consolidates Iberdrola's position in the UK, where it already owns Scottish Power.
Iberdrola's excellent reputation in the energy markets - as TotalEnergies' executives, who are not usually the type to hand out flowers, are the first to point out - also extends to the financial markets and investors: the Group has provided its shareholders with a total return far superior to its European peers, and even to its best North American peers.
Over fifteen years, with remarkable linearity, like a metronome, its profit and dividend per share have each grown at an annualized rate of 6% and 7%. This is better than TotalEnergies, which is no mean feather in its cap, and incomparably better than the mediocre economic performance of Enel, or the downright disastrous one of Engie; to its credit, the latter is not always the master of its own destiny.
Iberdrola's future lies in controlling the networks, its business segment that offers the best long-term visibility. This segment will absorb two-thirds of Iberdrola's annual investments, with priority given to the North American market, which is more profitable but very difficult to access. The aborted takeover of PNM Resources earlier this year is a case in point, even if the Group hints that this was merely a step backwards.
At the same time, four-fifths of our investments will continue to be directed towards developed and regulated markets. As you can see, the Spaniard's appetite for risk remains limited. The same applies, of course, to the balance sheet, with net debt unlikely to exceed EBITDA by a factor of 3.5.
The renewables segment, with the economic situation and saturation of the major basins, is tending to take a back seat in the new strategic orientations, with 9GW of additional capacity in the pipeline over the next three years. Iberdrola is well integrated into almost the entire wind energy supply chain - an essential parameter if it is to hope to make its projects profitable - but it is only involved in this sector with the help of external financing, which clearly dilutes its risk.
The Group plans to generate cash flow of EUR18 billion in 2026, from which we can subtract the EUR12 billion of investments planned to date to obtain an estimated free cash flow of EUR6 billion, and a dividend distribution to shareholders of EUR3.8 billion - i.e., for an investor entering at the current price, a yield of 4.4% expected to date.
This would be perfectly in line with the Group's management strategy, which aims to invest two-thirds of its operating cash flow, and to distribute a good fifth to its shareholders.