Ignacio Galán, the company's Chairman, announced today that the economic impact of IBERDROLA's activity in Castile and León in the first nine months of the year has totalled the figure of 500 million €. Mr. Galán was speaking at the meeting of the company's Consultative Board for the region, which was held at the Siro Group's R+D+ i Centre in El Espinar (Segovia).
Around 74% of this amount, i.e. 370 million €, correspond to purchases made in the region and over 100 million € to investments made by IBERDROLA in the areas of renewable energies, distribution, generation and the real estate business. The company spent around 64% of the total for purchases (over 235 million €) on the suppliers of works and services and over 125 million € on the purchase of materials.
IBERDROLA, which has cemented its position as one of the engines in the regional economy, devoted over 50 million € to the area of renewable energies between the months of January and September. In this sector, the highlight was the commissioning of three wind farms in the provinces of Burgos, León and Soria, with a combined installed capacity of 56 megawatts (MW). This new development brought the total installed capacity from renewable sources to over 1,200 MW, 5.7% more than at the close of the third quarter of 2009.
The company is now building two wind farms in Burgos, one in Palencia and another in Soria - Fuentesalada, Los Collados, Cruz de Carrutero and Layna, respectively. The combined installed capacity of these farms will be 114 MW and these projects will account for the creation of over 290 new jobs. When these new facilities are commissioned, IBERDROLA will reach a total installed capacity of around 1,260 MW in this region, meaning 2.2 million tonnes less of CO2 emissions into the atmosphere.
Ignacio Galán also took the opportunity of this morning's meeting to go over IBERDROLA's figures in the first nine months of the year in Castile and León, where the electricity output has totalled 11,834 gigawatt hours (GWh), up 65.8% on the close of September 2009. The most significant increases were recorded in hydraulic (+157%), renewable (+20%) and nuclear (+11.4%) generation. Demand in the region has increased by 3.5% on the same period of 2009, with growth rates in excess of 3% being recorded in all sectors: residential, services and industrial.
The Chairman of IBERDROLA briefed the members of the Board on the main projects carried out in the area of distribution, to which over 20 million € were allocated. These include the commissioning of two new substations in Valladolid - Peñafiel II and Zambrana- and the extension of the substations of Benavente, in Zamora; Piedrahita, in Ávila, and Guijuelo and Íñigo, in Salamanca. He also explained that there are plans for other substations, i.e. Venta la Tuerta, in León, and Langa and Bachilleres, in Ávila, to be commissioned before the end of this financial year.
IBERDROLA is also building a further five substations, to be commissioned in 2011 - Prado Marina, in Burgos; Huerta and Mercasa, in Salamanca; and Villabrázaro and Valderrey, in Zamora-, as well as a new high voltage 45 kilovolt (kV) line between Cañadillas and Fuenterroble, in the province of Salamanca.
Vicente del Bosque, new Board Member
At this morning's meeting, Ignacio Galán also introduced Vicente del Bosque, Coach for the Spanish National Football Team, as a new member of the company's Consultative Board in this region. This body, which was set up in June 2002, is formed by VIPs from the economic, financial and social sectors in Castile and León. The intention behind it is to gain first-hand knowledge of the situation in the region, exchange information and contrast opinions, all with the ultimate aim of strengthening IBERDROLA's ties with this territory.
Other initiatives worthy of mention carried out by IBERDROLA include R+D projects, restoration and maintenance of cultural heritage, illumination of buildings and environmental protection. The company has signed two collaboration agreements with the Regional Government of Castile and León, the Regional Energy Council and the City Councils of Valladolid and Palencia, to set up a number of initiatives aimed at implementing electrical mobility in this region.
The IBERDROLA Foundation, together with the Portuguese Ministry of Culture and the Regional Government of Castile and León, also plans to carry out an ambitious project involving the restoration and maintenance of the monumental ensemble of Romanesque art in Portugal and in Castile and León, more specifically in Salamanca and Zamora. This project will affect 33 temples located in the vicinity of the Duero and Támega rivers and investments will climb to 4.5 million €.
IBERDROLA was also behind the artistic illumination of the interior of the Church of St. Nicholas of Bari, in Burgos. In collaboration with the Spanish Natural Heritage Foundation (Fundación Patrimonio Natural), its renewable energies subsidiary launched a publication on Protected Natural Areas in Castile and León.
As a result of its firm commitment to Castile and León, IBERDROLA has an installed capacity in this region of over 5,600 MW, almost 230 substations, over 15,100 transformation centres, around 6,225 kilometres of very high and high voltage lines, over 20,000 kilometres of medium voltage lines and almost 26,000 kilometres of low voltage lines. The company has 1.5 million customers and 1,240 employees in this region.
A solid strategic model
Ignacio Galán also explained the Group's results for the first nine months of the year to the members of the Consultative Board: IBERDROLA obtained a net profit of 2,069.6 million €, 2% more than in the same period of 2009. Diversification has allowed the company to balance the different course of the various areas and obtain growth in different settings, with an overall improvement in all areas of business.
IBERDROLA ended the third quarter on a positive note, as a result of the higher output, improved efficiency and a stronger balance sheet. Thanks to the increases in turnover (22,978.5 million €, +16.1%) and gross margin (8,674.5 million €, +9.2%) in this period, the company managed to record a 12.4% increase in EBITDA (5,562.6 million €), 9.1% in EBIT (3,568.4 million €) and a 14.4% increase in operating cash flow (3,956 million €).
Mr. Galán explained that IBERDROLA's management in the first nine months of 2010 has sought to consolidate the Group's financial position with the aim of preserving its solidity. The company has optimised the structure of its balance sheet with greater efficiency (+10%) in all areas of business and a 2.2% drop in the net operating expenses to gross margin ratio.
The company also registered improvements in its debt profile and financial ratios, with liquidity rising to 10,166 million €, a figure that is set to rise again with the next tariff deficit placement. IBERDROLA reduced its leverage ratio in this period, going from 47.4% at the end of the third quarter of 2009 to the current figure of 45.3% - not including the impact of the tariff deficit- and net adjusted debt - without the deficit - stands at 25,677 million €.
The results obtained until September 2010 prove the success of the strategy followed in recent years by the company, which has strengthened its energy leadership in this period, on the basis of the major investments made - in excess of 62,000 million € between the years 2000 and 2009.
Following its international expansion, the Group now operates in 40 countries and has managed to diversify its business in the more liberalised areas that are best positioned for economic recovery. The internationalisation of the company has enabled it to climb to first place in the national utility ranking, as one of the main Spanish companies in the Ibex 35, the world leader in wind energy and one of the five largest global utilities in terms of stock market capitalisation.
The Chairman of IBERDROLA informed the company's Consultative Board for Castile and León that the company expects to increase EBITDA and recurring net profit for the year 2010 as a whole, as a consequence of contextual improvements: demand is expected to stabilise, the Group's installed capacity is set to increase, efficiency is expected to increase, investments are set to match the cash flow that is generated, the tariff deficit in Spain is expected to be securitised and debt ratios are expected to improve. This will enable the company to maintain or even improve its dividend.
IBERDROLA's Consultative Board in Castile and León is chaired by Ignacio Galán and its members are: Fernando Becker, Head of Corporate Resources in the company; Julio Fermoso García, member of the Board of Management of Caja España de Inversiones, Salamanca y Soria, Caja de Ahorros y Monte de Piedad; José María Arribas Moral, Chairman of Caja de Ahorros Municipal de Burgos; José Antolín Toledano, Chairman of the Antolín Group; Rafael Pérez González, Chairman of the Helios Group; Juan Manuel González Serna, Chairman of the Siro Group; Pedro Díaz Mesonero, Chairman of Disan Alimentación, and Vicente del Bosque, Coach for the Spanish National Football Team. The Board Secretary is Joaquín Boneta, the company's Regional Manager in Castile and León.
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