Iberdrola, S.A. (IBE) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. First of all, we would like to offer a warm welcome to all of you who have joined us today for our 2021 Nine Months Results Presentation. Secondly, we wish you a healthy year 2021 for all of you and your families. Now on to the reason why we are all here, our nine months results presentation, which will follow the normal format. Firstly, we will begin with an overview of the results and the main developments during the period given by the senior executive team that we usually have with us. Our Chairman and CEO, Mr. Ignacio Galan; Mr. Francisco Martinez Corcoles, Business CEO; and finally, the CFO, Mr. Pepe Sainz. Following this, we will move on to the Q&A session. I would also like to highlight that we are only going to take questions submitted via the web. So please ask your question only through our web page, www.iberdrola.com. Additionally, we expect that today's event will not last more than 60 minutes. Hoping that this presentation will be useful and informative for all of you. Now without further ado, I would like to give the floor to our Chairman and CEO, Mr. Ignacio Galan. Thank you very much again. Please, Mr. Galan.

Good morning, and thank you very much for your participating in today conference call. In the first 9 months, the Iberdrola adjusted net profit increased by 5% to EUR 2,680 million. Reported net profit reached EUR 2.4 billion, down 10% once we include the impact of the gas clawback approved by the Spanish government, which we expect to be considerably lower after the new measures opted yesterday. As well as nonrecurring tax item, mainly on the noncash impact of the increase in the corporate tax rate in U.K. reported EBITDA grew 11% to EUR 8,165 million. Thanks to the strong operating performance in the year United States and Brazil business which more than offset the impact of high commodity prices in our generation supply business in Spain and UK. Investment reached EUR 7 billion up to 6% registered a new record driven by additional renewable capacity with 3,750 megawatts installed in the last 12 months and more than 7,200 under construction; a 27% growth in network investment, which increased in all geographies. 77% of the total investment was allocated to international market. Over the first 9 months, we have also consolidated additional growth platform in our traditional markets and new regions. We continue accelerating our expansion in offshore wind, building on the impressive momentum of this technology around the globe. With close to 3,000 megawatts already secured to be in operation between 2023 and 2026 in the United States and Europe. And several new opportunities for oncoming action in this region as well as in the new market like Asia Pacific. In [ Atmos ], we expect to close the transaction with the New Mexico utility PNM Resources before the end of the year, improving even more our United States footprint in creating additional growth opportunity in this country. Finally, our group is at the best position to navigate the current macro and commodity environment, thanks to the business and financial model, we have been implementing for 2 decades reinforcing with additional actions taken over the last month. Driven by all these factors, yesterday, the Board of Directors decided to approve the interim dividend of EUR 0.168 per share payable in February 22, showing once again our commitment to an attractive and sustainable shareholder remuneration. EBITDA was up 11% to EUR 8.1 billion after -- even after negative foreign exchange impact on EUR 260 million. Networks contributed almost 50% to the operating results, with growth in all regions, mainly due to higher revenues in U.S. from new rate cases and improving result in Brazil, driven by tariff adjustment, transmission investment and the contribution of Energia Brasilia since March. Renewables did maintained a positive trend of the last quarters, led by new operating assets in the year in all geographies like East Anglia one offshore wind farm in the U.K. and higher production, particularly in Spain and Brazil, which more than compensated the lower wind resource in U.K. and U.S. and the decrease in hydro production in Brazil due to severe drought the country has been suffering. Renewable result in Spain also reflect the positive impact of the reversal of court of taxes unduly charged in the past. And the new asset rotation measures, which show our flexibility to offset this complex short-term situation to serving global results, thanks to our diversified business portfolio. Finally, generation supply EBITDA was down 45%, impacted by the sharp rise in the spot prices caused by dynamics of the gas market, which affected both Spain and U.K. As you know, the effect in Spain was even higher to the clawback of non-emitting generation implemented in mid-September. Assuming extraordinary revenues that we have not received as our production is sold in advance at fixed prices much lower than current spot prices. As mentioned, this impact will be withdrawn and is not expected to continue in the coming months after the measure adopted by the Spanish government yesterday. Investment, in the last 6 months, we reached a new investment record up to 6% to more than EUR 7 billion, almost 80% correspond to international market, mainly U.S. and Brazil. Investment in Spain reached EUR 1.6 billion, increasing by 21% from the previous year and becoming our second investment destination. Close to 90% of total investment was allocated to renewables and networks almost equally split. In the last 12 months, we have commissioned 3.8 gigawatts of new renewable capacity, which increased by 11% to reach 37,400 megawatts globally. Capacity addition include new offshore wind farm in most of our geographies for more than 1,200 megawatt. 1,500 megawatt of solar PV, mainly in Spain with projects across the whole country. 880 megawatt of pumped storage capacity responded to the full group of Gouvaes, the first of the 3 dams Tamega complex in Portugal. Finally, we have put in service more than 100-megawatt of battery storage, including 50 megawatt stand-alone battery in Ireland and hybrid facilities allocated in U.K. wind farm in [ Gale ] and the solar PV plant on our [ Anelo 3 ] at Puertollano in Spain. All these figures confirm the acceleration of renewable investment we have reported in the last quarters. In just 9 months, we have installed the same capacity than the whole 2020. And we have the construction of more than 7,200, both sides of the Atlantic, on this total, 2,600 correspond to offshore wind. By geographies, 37% of capacity under construction is in the United States, mainly in offshore wind, but also in several onshore wind and solar project. 35% is located in Spain and Brazil. And the remaining 20% is in European countries like France, Germany, Portugal, Italy, Poland and Greece as well in Australia. Investment in Networks has also increased significantly up to 27% to reach EUR 3,185 million, growing in all our markets. This trend will continue in the coming years as new regulatory frameworks are recognizing that networks are the backbone of a fully decarbonized energy system. By geographies, the contribution of Brazil is expected to continue increasing, led by organic investment in transmission and distribution in the integration -- and the integration on Energia Brasilia. New distribution tariff were set last April for Neoenergia Pernambuco up to March 2025 and just a few days ago for Energia Brasilia up to 2026. On top of this, annual tariff adjustment for Neoenergia Coelba, Cosern and Elektro have been approved. In United States, new rates were approved in Connecticut until 2023. And the resiliency legislation in New York will lead to additional investment in the state over the next decade. In the U.K., in the next days, we expect the final determination from the competition and market authority regarding the transport remuneration framework up to 2026. Also in December, the distribution companies will submit to OFGEM their financial business plan up to 2028 with significant increase in investment. In Spain, after 2 consequent decreases, the remuneration rate of our distribution has been fixed up to 2025 at a level of 5.58% pretax. And we have started several times the key limiting factor to increase investment in Spain continues to be the cap linked to GDP growth within our opinion undermines the speed required to reach climate targets. Global emissions need to fall by 45% in just a decade if we want to have any chance of reaching carbon neutral by 2050. Fortunately, consensus about the urgency of the benefit of the energy transition is becoming enormous. And I am sure that we will see this trend reaffirming in the next 2 weeks at the COP 26 that will take place in our home city of Glasgow. The International Energy Agency predict that reaching Net 0 will require investment in clean energy technologies worth $4 trillion per annum. At Iberdrola, we are in the best position to capture these growth opportunities, thanks to our renewable pipeline of 82 gigawatts in our core countries and the new promising markets. Right now, we are investing in flagship project in all technologies linked with the energy transition around the world. For 317 megawatt of Port Augusta wind solar hybrid project in Australia, 590 megawatt Francisco Pizarro solar plant in Spain. One tested the 100 [indiscernible] giga battery in Portugal. Of the 800 megawatt Vineyard Wind off-shore wind farm in Massachusetts. In transmission, we have more than 5,000 kilometers of line under construction in [indiscernible] state in Brazil for a total investment of BRL 2 billion. We have started works at NECEC a 230 kilometer high-voltage interconnection between the U.S. and Canada. We have also expanded to new countries with a stable energy framework like Chile, where we are buying along with other partners for the $25 billion HBDC line. In the last months, we had also made significant progress in greens hydrogen through project for industrial processes of heavy duty transport. To mention just a few, Scottish Power has awarded the largest project announced in U.K., where we will be installing our Whitelee wind farm. Avangrid has already submitted proposal in several states like Texas, Connecticut, Oregon, Maine, or New York. And in Brazil, we have signed cooperation agreement with the governments of Pernambuco, Rio Grande do Sul. All in all, we have more than 60 green hydrogen projects in Spain, U.K., Portugal, Australia, United States, Brazil, Mexico and Italy. The [ good mobile ] investment for more than EUR 3 billion in the coming years. Finally, we continue to accelerate offshore wind expansion in Europe and U.S. as well as the other high-growth market in Asia Pacific region. In Europe, the construction of Saint Brieuc in France and Baltic Eagle in Germany is moving forward as scheduled. The manufacturing offshore substation and foundation continued progressing in line with our plan to have the project fully operational in 2023 and 2024. We have also starting works for the construction of Wikinger in the German Baltic sea, once executed a preferential right after recent auction, which in associated investment more than EUR 100 million, Windanker will add 308 megawatts of the capacity by 2026. We are taking part in several auctions to secure additional growth opportunities over the second half of the decade. The bids for Scott Wind in U.K. have already been submitted, including fixed and floating project. We are preparing to participate in the full round of contracts for differences in U.K. with the East Anglia hub, a 3,300 megawatt project with associated investment more than EUR 7 billion. Next month, we will also take part in the Danish tender in partnership with Total for 1,000 megawatts of offshore wind farm. We have prequalified our French standard in Normandy for another 1,000 megawatt and in Brittany for 250-megawatt floating offshore wind project. In U.S., we continue progressing in the construction of the first largest scale offshore wind farm in the country, Vineyard Wind 1. The project completed all permitting and authorization process in May and has already secured its financing. As you know, we also reached an agreement with Copenhagen Infrastructure Partners to take full ownership of the lease area, 534, which will allow us to develop 2,000 additional megawatts. Corresponding to Park City wind, a 804 megawatt project with PPA already secured with the state of Connecticut and the Commonwealth Wind for which we have recently made a bid for up to 1,200 megawatt in Massachusetts. Our proposal includes a power purchase deal with 20 municipal electricity utilities in the state and any initiative to transform Salem harbor into a Tier 1 offshore wind logistics center. Other opportunities remain open in this area like the new auction announces in Rhode Island, New York and Connecticut. And on top of that, BOEM has started the process of the environmental impact study of the first phase of the 2,500 megawatt of Kitty Hawk project in the state of Virginia, North Carolina. In the last month, we have also made strong progress in development of our Asia Pacific hub. We have already more than 2,000 megawatts in Japan, ready to participate in the next 2 auction in 2022 and 2024. We are working in 3 new projects in Taiwan with a potential capacity of about 6 gigawatts, and we are expanding to other strategic Asian markets like South Korea. But probably the most relevant growth platform for the group is in the short term, will come through the upcoming integration of New Mexico utility P&L resources expected before the year-end. It will add 100 regulated customers in the high-growth market like New Mexico and Texas, bringing additional opportunities for [indiscernible] transmission and renewable businesses. Moving on the regulatory context. We are now seeing the benefit of the strong and current European energy policy we have been defending for decades. Recently, the European Commission has published a communication energy prices that reaffirms its determination to lead decarbonation globally and its commitment to market solution. The communication state clearly then the reason for current increase in wholesale power prices is the dynamic of gas market and other European emission trading system, which is in the fundamental instrument to switch from fossil fuel to clean technologies. Also, the commission says that it’s time to speed up investment in the green transition with more renewables, networks and storage as the best instrument against price shocks and to reduce dependency of imported fossil fuels. In Spain, the increase in export prices is affecting 10 million low consumption customers with less than 10-kilowatt of installed power only in regulated tariff will represent 10% of the total electricity demand. This customer has suggested to the volatility of those prices due to a regulatory design. Industries, businesses, public institutions and the remaining residential customers are in the liberalized market, which gives them the capacity to protect themselves through bilateral agreement at stable prices. Of the total, 76% of the demand is protected through fixed-price contracts agreed with their suppliers. And the remaining 14% correspond to industrial customers and public administration with contract in this or hedged due to their own decisions. In this context, yesterday, the government approved the new Royal decree law, clarifying that the energy negotiated under bilateral contract at fixed prices, not linking to the spot market will be excluded from the gas clawback in non-emitting generation approved on September 14. In the case of Iberdrola, we sell all our clean available production through fixed-price contracts. We have maintained to our customers benefiting them with savings worth around EUR 2 billion. In some cases, we have already bought even energy from the wholesale markets and at higher prices than [indiscernible], we have already generated a lower result in our liberalized business. That happened not only in Spain, it happened as well in U.K. Higher gas and oil prices are also creating inflationary pressure in all economies and the supply chains of some raw materials like steel or polysilicon are suffering bottlenecks as well. Iberdrola's profile provides significant protection in this context. Around 17% of our revenues come from A rated countries linked to currencies such as dollar, euro and pound. All our available production in Spain and U.K. for 2021, and 96% for 2022 is already sold forward. At the same time, major equipment purchases contract, '21 and '22 are already closed, protecting key projects from any potential duration of price shocks. Finally, 45% of our operating margin is protected for inflation increases. And 70% of the group debt is fixed interest at intra rates. Up to September, operating cash flow reached EUR 6,412 million, with an increase of 7%. This, together with our debt management measures has led [Technical Difficulty] There was a new green financing, sustainable commercial paper and credit lines, linking to sustainability indicators. We have significant protection against short and medium-term shocks, but we know well the business project can only be sustainable in the long-term if they are firmly based on environmental, social and governance principle. The model we have implemented for the last 2 decades has made us a global benchmark in climate action as reflected in our #1 position in the last Influence Map ranking, but also an engine for growth in employment in the region where we are present. We have accelerated our investment plan in renewables and networks to reach zero-emission already by 2030, 20 years ahead of European target. Always compliant with the highest standard of diversity protection, and increasing even more the 400,000 jobs, that Iberdrola currently sustains over the world. Standard and Poor's has recognized our leadership by confirming our position in the latest review of global clean index in which largest utilities, with significant renewable pressure were excluded. I will now hand over to Pepe Sainz who will present our results in further detail.

Thank you, Chairman. Good morning to everybody. As the Chairman has handed me in advance the main issues of the P&L. Let me start by giving you a view of the tax impacts, nonrecurring tax impacts in these first 9 months. As you know, in the second quarter, we accounted for EUR 453 million corresponding to U.K. deferred taxes after the decision of the U.K. government to increase corporate tax rate from 19% to 25% in '23. Then we have also a EUR 382 million positive after-tax impact due to the reversal of the Spanish levy, corresponding to years '13 to '16. This is after tax, before taxes we are accounting EUR 417 million at the levies item and EUR 92 million in the net financial results. Let me highlight that this is a tax issue and doesn't affect the tariff components. And finally, there are EUR 85 million negative post-tax corresponding to the gas clawback. As a consequence of the Royal Decree, as the Chairman has commented that an important part of this will -- or totally will be reversed at the end of the year. 9 months reported EBITDA was EUR 8,165 million, up 10.7%, excluding EUR 128 million of Covid impact, EUR 114 million of the gas clawback and EUR 417 million of the Spanish levies, our adjusted EBITDA increased 5.2%, improving the 3.8% increase at June. FX impact has been EUR 260 million. After the valuation of the real, that is down 11.4% and the U.S. dollar, 6.5%, while the British pound has revaluated 2.1%. So excluding also FX impact, our EBITDA would have grown 8.7%, showing the recurring performance of the business. Revenues increased 15.5% to EUR 28 billion and procurements, 24%, reaching EUR 15.4 billion. Gross margin rose by 6.3% to EUR 12.6 billion and 8.9%, excluding Covid and FX impact. Net operating expenses rose 2.7% to EUR 3.1 billion. Excluding FX, net operating expenses would have grown 6.9%, mainly driven by the new businesses as the -- in Brazil, but also in Australia and in France with our workforce growing by 9%, partially compensated by the contribution at other operating income included in external services of Spanish asset rotation of EUR 170 million. Analyzing the results of the different business and starting by networks, its EBITDA grew 11.5% to EUR 3.9 billion, and 14% excluding the negative impact of FX and Covid. EBITDA grew in all geographies. As you can see in the slide, Spain contributed 32%, Brazil reached 26%; the U.S., 23%; and the U.K. contributed another 19%. In Spain, the EBITDA grew 3.7% to EUR 1,250 million due to the contribution of EUR 19 million of positive settlements from previous years and 11% lower expenses. Despite the lower remuneration falling from 6% in '20 to 5.58% in '21, reducing the EBITDA by EUR 22 million despite higher investments. In Brazil, EBITDA grew 54% to BRL 6,515 million, driven by tariff updates and inflation adjustments in distribution and increasing contribution from transmission in Neo Brasilia. In the U.S., the IFRS EBITDA was 15% up to $1,078 million due to the increase in investments and to past cost recognitions. U.S. GAAP amounted to $1,152 million, $74 million over the IFRS EBITDA, mainly due to more regulatory assets and liability and the difference in the timing of accounting of the levies. Finally, in the U.K. EBITDA grew 1.3% to GBP 656 million, thanks to the higher asset base. In renewables, EBITDA rose 71% to over EUR 3 billion and 52%, excluding the FX impact and the positive contribution from the Spanish levies reversal. This growth was driven by Spain, the U.S., Mexico, Brazil and the international business. Production increased 12.7% with 10.4% more installed capacity that reached 37,481 megawatts and higher load factor. In Spain, EBITDA was EUR 0.6 billion. It includes EUR 470 million from the Spanish levy and EUR 170 million of asset rotation. Output was 23% higher and prices also helped. In the U.S., EBITDA increased 27% to $652 million, with positive contribution from the Texas cold snap and new capacity, both with 3% lower output due to a 6% lower wind resource. In the U.K., EBITDA fell 17% to GBP 370 million due to a 25% lower onshore production with the lowest wind resource in the last 30 years, partially compensated by higher offshore production due to East Anglia in full operations since the beginning of the year, although the offshore wind factors were also quite low. In the international business, EBITDA grew 13% to EUR 264 million, thanks to higher contribution from Australia, France and Poland, and despite lower production from Germany and initial development costs. In Brazil, EBITDA grew 53% to BRL 688 million as a consequence of the extension of hydro concession to recover costs from previous years and 6% higher wind reserve. Finally, Mexico, EBITDA rose 100% to $124 million due to a 68% higher average operating capacity and higher wind resource. Generation and supply EBITDA fell 45% to EUR 1,086 million. The business has been negatively affected by a lower thermal output, higher wholesale prices negatively affecting the Spanish and the U.K. business as well as cold spells in Europe and Mexico. In Spain, the EBITDA was down 60% to EUR 468 million, with a 4% output fall, higher wholesale energy purchases at higher prices with output already sold at fixed prices and the additional negative hit of the Filomena storm in Q1 and the gas clawback. In Mexico, the EBITDA fell 13% to USD 558 million, negatively affected by the Texas cold snap for around EUR 61 million. In addition, there has been an increase in access fees of EUR 21 million and gas costs that had not been passed to tariffs. In the U.K., the EBITDA fell 39% to GBP 83 million due to higher energy procurements at higher wholesale prices added to higher demand and lower wind than forecasted. Brazil added BRL 468 million to the EBITDA, highlighting the better performance from our CCGT plant. And in the international business, EBITDA was minus EUR 20 million affected by cold snaps and development costs and lower growth due to Covid. EBIT was 19% up to EUR 4.8 billion. D&A was 2.6% up to EUR 3 billion, but excluding FX, it grew 7.2%, mainly due to the larger asset base and activity. Provisions were down 13.5% to EUR 320 million as a consequence of lower bad debt provisions related to Covid as collections are improving. Net financial expenses grew EUR 55 million to EUR 696 million as debt related costs increased EUR 49 million. The impact of higher cost of debt was EUR 81 million. And this is basically due to the Brazilian inflation-linked debt that it is more than offset at the EBITDA level by revenues indexed to inflation. Excluding Brazil, our cost of debt decreased 2.87%. And that is partially compensated by a positive $32 million from a lower average net debt due to our issues of hybrids. Non debt related costs increased by EUR 7 million, mainly linked to the negative impact of positive FX hedges in 2020, mostly compensated by positive one-offs in '21, mainly the accrued interest from the Spanish levies and our mark-to-market of our share in Wallbox as a result of the IPO. Iberdrola funding and balance sheet is well positioned for a possible rise in inflation as we have a prudent policy approach in our funding. Our debt is 68% fixed. As you can see in the slide, we have a fixed debt structure higher than our fixed revenue structure, thus having a balance sheet well positioned in a possible rise in inflation and interest rates. Our average right of debt is over 6 years, but we have also EUR 3.5 billion forward-start swaps that will cover part of our debt needs in the future. The only exception is our debt in Brazil, which is inflation linked as our revenues are also linked to inflation in Brazil. Excluding -- sorry, including EUR 7.5 billion in hybrids fixed funding goes up to 73%. Our reported credit metrics improved due to, first, the adjusted net debt decrease of EUR 664 million to EUR 37 million despite the investment effort, thanks to the hybrid issues; and second, our improvement of our FFO. And as that in our 12 months grew 4.7% to EUR 8.7 billion. As a consequence, our adjusted net debt-to-EBITDA fell to 3.4x. Our FFO adjusted net debt improved 1.4 percentage points to 23.4%. Retained cash flow over net debt improved to 20.8%, and our leverage ratio strengthened to 41.7%. Adjusted net profit grew 5.2% to EUR 2,688 million compared to last year's adjusted net profit of EUR 2,554 million. Adjusted net profit excludes extraordinary impacts, including Covid, Spanish levy reversal and nonrecurring items, but not FX impact as we consider FX as part of the risk that brings being a global player. Reported net profit was EUR 2,408 million, down 10.2% due to the accounting of the U.K. corporate tax. In the annex, you will find also the Iberdrola interim dividend calendar. Thank you. The Chairman will conclude the presentation.

Thank you, Pepe. You have seen over the first 9 months, the group has shown a strong operational performance in a very complex environment. We expect to accelerate this trend in the next 3 months, thanks to additional renewable capacity in larger geographies, together with the full year contribution of new projects. In networks, we will benefit from higher revenues due to the new rate case in U.S., tariff increase and the consolidation of Neoenergia Brasilia in Brazil and the transmission product through different geographies. Subject to deeper analysis, we also expect now the regulatory context returns to normality in Spain after the measure approved yesterday by the government. And finally, we will maintain our financial strengthens to our active debt management. All these factors drive us to reaffirm the net profit and dividend outlook already provided to you for 2021, showing once again our commitment to value creation for 300,000 shareholders. And to the generation of well jobs and sustainable environment to our stakeholders in all our communities. For our customers, this means providing them competitive and clean energy as well as an excellent service. As mentioned, only in Spain, our fixed prices are saving almost EUR 2 billion to our customers, protecting them against current spot market prices. Our model is also allowing us to create sustainable jobs with a best-in-class labor condition. Since the beginning of the year, we have had 5,000 new hires, 99% of our labor contracts are permanent, and we have provided more than 50 hours of training per employee clearly above our European average. On top of that, we have leading practice to facilitate work/life balance and promote diversity and inclusion. Our Escolas De Eletricistas or school of electricians for women in Brazil were a clear example. This pioneering initiative, is an excellent way for women to access job in the utility industry traditionally good mostly for men. Finally, we are proud of our international corporative program with more than 10,000 participant worldwide. Our supply chain is also benefiting from purchase for EUR 9 billion in just 9 months for a total of EUR 22 billion awarded since the beginning of 2020, giving our suppliers the security required to present jobs, a new business opportunity to grow and expand internationally. Finally, our green investment are also driving a more sustainable future. Through more decarbonization and air quality, with just 50 grams of CO2 per kilowatt hour in Europe versus more than 300 grams our peers. EUR 7.5 billion of tax contribution last year, which approximately EUR 3.4 billion correspond to Spain. More than EUR 300 million invested in research development every year to reduce even more our carbon footprint and improve customer service. Of the support of [indiscernible] the electric charges company Wallbox, which, as you know, is now listed in New York Stock Exchange. We are also leading programs aimed to training employment people for new occupations in sectors of the future Reskilling 4 Europe, which involves 15,000 jobs in Spain the first phase. These are just some example of the benefits created by our model base on strong values and firm belief of social market economy. Thank you very much for your attention. Now we are ready to answer your questions you may have.

Thank you, Chairman. Before starting with the Q&A session, as I mentioned earlier, our commitment is that the presentation will not take more than 1 hour today. Today is a day with a large number of companies presenting results and taking into consideration those who have to write about these results today, I think it is important to keep the 60 minutes commitment. We will try to address as many of the questions received as possible. If any are left out of the Q&A session, as always, we will be available to answer them from the IR department. And thank you for your understanding. Moving to the Q&A. The first is coming from Javier Garrido, JPMorgan; Rob Pulleyn, Morgan Stanley; and Harvey Wyburd, Bank of America. And it's the following. May we ask how Iberdrola considers the full year dividend at this stage given interim paid flat over the year and earnings impact from gas clawback taxes less than figured?

So sorry. I think in the first 9 months, results are progressing as expected. Operating performance, as you see, continues to be good. We have accelerated investment and capacity additions. We have new rate cases in New York and additional growth as well in transmission. We have already improved our financial strength. And what we expect in the next months, certain higher renewable operating capacity. So we expect 4,000 megawatt in the whole 2021. And the recovery of the -- as well the good results. I think it's not normal in U.K., the wind result has been less for the last 30 years. So we expect then the things is coming to normality. Also better performance in our business in United States and Brazil to continue in this line. And on top of this, as we have already said, the regulatory outlook, I think, is improving, especially in Spain, we have already just, as I mentioned, clarifying the previous royal decree. I think thanks all those things that is what I was mentioning in my speech, we are reaffirming our net profit outlook already provided by the year 2021. You remember, was in the range, EUR 3.7 billion, EUR 3.8 billion or EUR 0.44 per share dividend for this year. Those are our expectations.

Second question comes from Javier Garrido, JPMorgan and Ahmed Farman from Jefferies and is the following. Now that we have seen the Spanish government amendment to the gas clawback, do you see any reason why you should not deliver your target net income of EUR 4 billion to EUR 4.2 billion in 2022?

Well, I think we are now in the process of making our buyer for next year. And I will give you some update on that one. But I think in this moment, we are already -- everybody is preparing the data and certain. I think our ambition is, as always, to fulfill what we has already been saying to the markets in our Investor Day. So -- but I think now we are already in the process of making all those things, and we will -- have already the first data, I think, for being approved by the Board by December. So I think I cannot already give anything. Apart in -- our goal is to keep already our promises, as always, we did.

The questions comes from a long list of analysts. First, Manuel Palomo, Exane BNP Paribas; Javier Suarez, Mediobanca; Alberto Gandolfi, Goldman Sachs; Harry Wyburd, Bank of America; Gonzalo Sanchez-Bordona, UBS; Jose Javier Ruiz, Barclays; and finally, James Brand, Deutsche Bank; and Jorge Alonso SocGen. What is the expected quarterly impact from the gas clawback after yesterday's announcement from the Spanish government, making the PPI contract at fixed price exempt from the gas clawback?

So as you mentioned, yesterday, the government approved a new royal decree law, clarifying the energy negotiated under bilateral contract. At these prices will not -- no linkage to the spot market will be excluded from the gas clawback. And I think we are already -- as you can imagine, it was published yesterday. We are now analyzing in detail these new measures and prove, which represents certain improvement in the situation created, reducing the negative effect then that had already initially estimated. In Spain, the issue of power prices, as I was already commenting, it was affecting 10 million customers on regulated tariffs. Regulated tariff is only those which are already less than 10 kilowatts of installed power in their homes. And that represents only -- I think this low consumers represent around 10% of the total electricity demand. And those one are already the only one which are involuntary because it's not voluntary. I think they are already in this one. They can already make their choice to move to liberalize, but those ones has not only moved at those one which are already affected by this volatility of the spot prices, and that's due a regulatory decision. I think we've been saying for a long, long time. We are the only country with those one which are the low energy consumers are already affected by volatility. I think countries around ourselves, Portugal. Portugal, we have the same already wholesale market, and they are not affected to such volatility, not France, not Italy, so -- which I think we are the only one. But I think it's important to note that this volatility is affecting, and these high prices, mostly those customers, which represent 10% of the electricity, which are 10 million, but is not a huge amount of electricity. Industries, business, public institution and all the remaining residential, either for more than 10-kilowatt installed power or those which are already on the regulated and they are allowed, and they have already decided to move to liberalize are -- all those one in the free market, give them the capacity to protect themselves through bilateral agreement at stable prices. And that is the case of Iberdrola. We have all our clean available production sold through contracts with fixed prices, and we have been maintaining this tariff so far for our liberalized customers, which I say industries, business, public institution and remaining residential, which are already in our liberalized tariffs in the -- we have already maintained these tariffs. We have already -- has already benefited for saving almost EUR 2 billion. Toward those ones with -- instead of being with us will be already on the buying from the spot market. I think in this context, I think our result has been affected, as I mentioned, because in some cases, we have been forced to buy electricity on the market because we have not enough production. I think our clean electricity is already an expectation, not always we produce what we are expecting and what we are not already producing we are expecting, we are forced to buy. And that is what is happening in Britain and this a happening in Spain as well, which is affecting to our result of liberalized business.

Fourth question comes from Andrew Moulder, Creditsights; and Stefano Bezzato, Credit Suisse. The September 14 decree included the introduction of separated auction from the part of the nuclear and hydro output. Does this provision remain in place after yesterday's announcement? And if yes, what kind of impact do you expect?

I've not already seen -- I don't think that that is going to be affected. I think that was already something which is going to be corrected. I think the electricity is already sold. I don't know what is going to be already is going to come from. I don't think that is going to be already made.

Next question comes from Manuel Palomo, Exane BNP. Could you share your views about the carbon clawback law in Spain? When do you expect it to be discussed, approved by the parliament and when it would be -- start being implemented?

Well, I think the recent communication from the European Commission reaffirmed the view, the success of ETS. So anything which I think, in fact, I think I was already participating a few weeks ago already on meeting with high level people in the European Commission, from the president and vice president and others. And since the ETS was already approved, and that were their words, greenhouse gas emission has increased by -- decreased by 35%, while GDP has increased for more than 40%. So I think it's a great success. GDP increases even with the measures taken to decrease the emissions. So it means that is a clear success of ETS. Additionally ETS consider certain mechanics to reduce the impact of big fluctuation in prices. I think is not need any regulation, they may interfere with the system which works properly. So I think, in fact, the European Commission considered the prices of carbon prices are not the most convenient, they have already, the markets that you reserve, the [ MSR ], which I think they can already use that one for increasing the number of rights in the market, or reducing the number of rights, carbon rights in the market. So I think if they're not intervening it because they are considering that it's working properly. I think in any case, I think this law, I was saying, it's already a bit a contradiction. I think all the principle of European Commission are based on the principle, who pollutes pay. And I think it has not much sense that those are not polluting paying as well or even more, so -- which I think they have to clarify this position. And I think it looks and the European Commission is clear in this point. So nevertheless, this law now is in the period of amendment, and I think we will see what is going to happen finally. Nevertheless, I think it's clear what the European Commission says in this communication. And I'm sure it's going to be taken in consideration in all these amendments of the law.

Next question comes from Gonzalo Sanchez-Bordona, UBS; and Stefano Bezzato, Credit Suisse. Can you give an update on the hedging prices in Spain for 2022 and 2023?

So Pepe, can you reply this one?

Yes. Thank you. In our previous results conference call in July, I think we informed you about that the hedging level for 2021 that was fully sold, was about high 70s, 75, 78, something like that. So I can tell you that for 2022 and 2023, the prices of hedging are completely in line with this level, which is less than half of the spot prices.

Next question comes from Jorge Guimaraes, JB Capital. How is evolving the liberalized margin of Iberdrola in Spain? Is the company being able to pass on to clients higher cost outside gas clawback?

So I think all that thing was very clear. I think we had already a situation which was already very strange. And now it's already clarified. And I think certain if there are some inputs in our -- for something that was not already -- was not contemplated when we make already our offers, our contracts. So we were forced to modify these terms. Now it's clarified, and I insist on that one. I think we have already sold all our available energy, clean energy is already sold forward. So I think if there are any new charges or whatever, we have to revise all those then. Nevertheless, I would like to insist that thanks to our fixed prices agreed with our customers, with our more than -- close to 7 million customers, they are benefiting in this environment of high spot market prices of around EUR 2 billion, thanks of those ones. And that is our position on this in this sense.

Question #9 from Rob Pulleyn, Morgan Stanley; Ahmed Farman, Jefferies; and Jorge Alonso, Societe Generale. What is the latest view on supply change inflation and the impact for Iberdrola's renewables expansion? Sorry, my microphone was out. I'm going to repeat. From Rob Pulleyn, Morgan Stanley; Ahmed Farman, Jefferies; and Jorge Alonso, Societe Generale. Question #9, what is the latest view on supply chain inflation and the impact for Iberdrola renewables expansion?

So I have mentioned in the presentation, we have mechanics to protect us from inflation. So 70% of our revenues come from rating countries. Almost 100% of our production is already sold forward in the next year. I think with margins more or less already covered. And all purchases for the rates, and that is important for rest of 2021 and 2022, our equipment is already hedged of close. And thanks to our business, I think 45% is margin protected for inflation because we have already regulated. That is already is a fixed rate. So -- and that is what allow ourselves to be confident, not only for this year in our results. But as well confident in our projection for next year, I think we are continue committed to deliver next year what we have already promised, which is EUR 4.2 billion or EUR 4.1 billion or 4 whatever billion next year net profit. I think because all those thing is already -- we have already protected of secure on this environment of potential increases in rate of interest, high inflation, high cost of component of materials. So those things, and because we have already sold 96% of our electricity at the numbers, at the prices which are already just covering or guaranteeing the margin, we were already making our plans. So I think altogether, make us this confident to be absolutely not only confident for 2021, but confident for 2022 to deliver the numbers that we were already given already in our projection in our presentation.

Question #11. Can you explain why Iberdrola decided not to participate in the late-stage renewable auction in Spain is from Javier Suarez, Mediobanca.

Well, as you know, we are traditionally -- we are participating in many auctions in many countries. So I think it's -- we are already permanently looking what is the risk and return in each of those ones. So I think, as I mentioned, we have already secured in the last few weeks already in offshore -- new offshore wind farm in Germany, Wikinger with 380 megawatt portfolio, which is almost EUR 100 million investment. I think we have already placed bids in Massachusetts, which is 1,200 megawatts, which can be already an investment in the range of $3 billion. We are already participant in Scott Wind auction in U.K. So -- and I think we will continue participating in auctions in United Kingdom, in the full round. In Denmark, I mentioned already with Total. In Netherlands, we -- was something in France, we are in Normandy, South Britain. So Rhode Island, New York and very many other ones. So I think is -- in this moment, 82% of our planned renewable capacity for 2025 is already installed under construction ready to build. So this new platform give us visibility for the second part of the decade, or even for the next year, guaranteeing the sustainability of our model. So I think in most cases, the return we are expecting are in the range of 200 basis points. So in the case of Spain, participating, not participating our decision that we are taking, depending on what you are expecting in every moment. I think if we expect that we can obtain better return in other places, we return in other places. Particularly in the case of Spain, we are, as you know, we are short in electricity. We are selling more electricity than one we produce and we are forced to buy. So that's why I think we are interested in making the fact last year, we build more renewable than almost the 3 or 4 competitors together. And this year, in this moment, we are the 1,500, 1,600 in construction, and that will be built. But those ones, which are building are not all ready -- most of them, for auction is already made for being already sold through our market. So -- which I think is for normality, I think we participate in those one we consider they are more attractive. We are not participating on the one we consider are less attractive. In the particular case of Spain, we are already very many in construction. And we have all the opportunities for making that one without being forced to make those ones through auction because we can sell directly to the final customer without needing to go to auction on that one. But I think we are nothing against. We -- sometimes we go, sometimes we are not going, normality.

Next question comes from Javier Suarez, Mediobanca; Javier Garrido, JPMorgan; and Harry Wyburd, Bank of America. Can you please update on the possible spin-off of your offshore wind subsidiary?

I think we are continuing taking some steps. I think the separation from CIP in United States, I think that helped to us to execute. We decide already to make a quick already decision on that one. We have already certain offshore is a growing business, which I think is we are already diversifying in new geographies. And I think we require huge investment to -- in this one, which I think that's why we are already studying all the consequences and implications for angles to make already this one, finance, corporate, et cetera. But I think we are already moving and continue taking a step. If we decide we can already make the things easier if we decide to go ahead with this one in the future.

Question #14, we see -- and sorry, it's coming from Rob Pulleyn, Morgan Stanley. We see EUR 170 million EBITDA from asset rotation in 9 months. May we ask whether meaningful asset rotation gains will be part of ongoing earnings? And if so, how much?

I think -- I don't know if Pepe has already commented, but if not you comment now. In last March, we have already signed some framework agreement with -- in case of Spain with MAPFRE to co-invest in renewable projects in Spain, focusing mostly in PV and wind onshore, with a target of almost 1,000 megawatts in this -- in the first phase. Also, we have already as well, as part of this asset rotation strategy, we have already signed as well an alliance with a company which is Prosolia to develop 1.3 gigawatts of solar PV in Spain and Portugal as well. What that provides, this provides additional platforms for renewable growth that allow us to crystallize the value of our portfolio, in some cases, and increase revenues, thanks to our experience in operating and maintenance our clean facilities. I think I give you these 2 example, but I can really provide you very many. I think it's something that I mentioned already joint ventures with Total and with another. So I think it's a part of what we did in East Anglia in U.K. I think it's already a part of how to use our capabilities, how we can really maximize the value of our assets and how we maximize our skill, knowledge and pipeline.

Next question comes from Javier Suarez, Mediobanca, #16. Can you explain the management changes announced today?

Well, I was planning to make a speech of that one, if you don't mind. That is the last question or not. Previous to one in the Spanish that we have. In that case, you don't mind you put that -- well, okay, I will -- that one. So I finished -- so yesterday, the Board of Directors has already approved certain things following my proposal. The first one is that Anthony Gardner was named by Chairman of the Board of Directors. So Anthony is in our Board since 2018. As well, the Board approved the nomination of Angeles Alcala, which has been as to now, member of the Board of Iberdrola, Spain. Now he's going to join the Iberdrola Board. Also yesterday, Samantha Barber, which is one of our member of the Board, have decided to leave the Board because she is already coming for another responsibilities in another places. So also, in terms of management, we are announced certain changes. Paco Martinez Corcoles, the Business CEO, which is here with us, is retiring after 35 years in Iberdrola. He has always been by my side in the last 20 years. So I think I would like to use this opportunity to recognize his magnificent work and his loyalty to this project, which I think he -- I hope he's going to continue in the Board, and I hope he can continue helping to me from the Board in this commitment, this proposal. Also, following my proposal, and with a positive report from Nomination Committee of the Board, the Board has already signed the nomination of Armando Martinez as new Business General Director. Armando has been in the group for 20 years in different roles. Latest one is as Director of Global -- in Global Networks. But before he was already [indiscernible], he was in Mexico. He was engineering. He was already passing through the different responsibilities in Spain and globally in [indiscernible] Spain as well. And for replacing Armando, in his role of Director of Global Network Business, we have already nominated Elena Leon that she was up to now Director of Planning, Management and Regulatory position. So I think my point of that is that we have already total the changes that provide total continuity of the project because all of them have already been in the group for many years, has been working very close with Paco. And I'm sure, I think he's going to follow his track without very many changes.

Last question. The last question is in Spanish. And it's from Manuel Palomo, Exane BNP Paribas and Jorge Alonso, Societe Generale. Could we review the potential of freezing of investments in Spain as a result of the regulatory uncertainty?

Well, I think that we haven't changed our prospects in Spain because we are a global company that is present in dozens of countries. And we have permanently have to focus investments on those companies that offer the best opportunities. And it goes without saying that what I believe is that these measures did concern our investors and we had the obligation, and we must revise the situation. We've never stopped investing in Spain. And as I pointed out before, in the last 9 months, we have increased our investments by more than 20%. I think that it's the country where we've had the biggest figure, about EUR 1.6 billion in this period. But what you also know and this is something that I've repeated many times in the past that we've always asked for stability and predictability. So what we want to have is a very clear-cut policy so that we can carry out the investment plans that have been put in place by us. And I think that with this new clarification, I think that the situation is much clearer than what we had before. So therefore, the plans are not going to be modified, and we're going to continue along the same lines, which, on the other hand, I have to repeat this. We haven't changed anything. In the first months, we've invested EUR 1.6 million. That is another 20% more than in the previous year in the same period. And now we have many 1,000s of megawatts under construction, and we have a tremendously extensive pipeline so that we can continue along the same lines. And as regard to our investors, I would also like to tell our suppliers that in the case of Spain, I believe that we have made purchases at the last 12 months or 18 months of the pandemic totaling about EUR 6 billion. So they have not at all been affected by this situation, but many of them don't only supply to Spain, but they also supply many of the teams we have abroad. And I always give the example of the offshore platforms, well, who was going to think that [ Navantia ] together with [ Windar ] was going to be one of our biggest suppliers for the offshore platforms that we are building for our offshore wind farms, for instance, or that the offshore substations are also being manufactured in Spain and in this case, in a place called Bardoli in Cadiz. So these are the examples, and I'm not going to mention [ bask ] suppliers like [ Ormatavel ] or like others, we have a very large number of purchases with them and nothing has been canceled.

Now Chairman, if I may. And I'll also make my comments in Spanish. I would just like to thank all the investment community, the analysts and everybody that follows us during these results presentations, as I said yesterday to the Board and the management team. I'm happy and delighted to have been in my job for all these years, but time rolls on. And all I can say, as I said, just it is to thank everyone for the enormous support that I have received. And this is a magnificent company. I ask you to continue to believe in it as, of course, you will. And it will continue to provide fruitful results, so continue to invest in it. And thank you very much. The advantage of online communication is that it's possible to clarify that without misunderstanding life. We are asked in this moment if we can comment again on the expectation on dividend per share, full year dividend per share and the guidance 2022 because it's not -- has really clear for the market.

So dividend for this year, very simple. Dividend for the year is the outlook was EUR 0.44, and we maintained the outlook EUR 0.44. Second, with respect of 2022, our expectation is to already deliver what has already been planned in our Investor Day, which is EUR 4.2 billion, I think -- EUR 4.4 billion. I don't remember the number.

EUR 4 billion to EUR 4.2 billion.

4 to 4.4 -- sorry, sorry the numbers, I am not really...

EUR 4 billion to EUR 4.2 billion.

EUR 4 billion to EUR 4.2 billion for 2022. So we maintain absolutely -- nothing is changed on that one. And for the year, it's EUR 0.44. And for next year is EUR 4 billion to EUR 4.2 billion. Clear.

I think so. I think so. If not, feel free to call to Investor Relations. Finally, now, please let me now give the floor to Mr. Galan to conclude the event.

So thank you very much for taking part of this conference call. And as always, Investor Relations team will be available for any information you may require. But be sure this year is EUR 4 billion to EUR 4.2 billion. And I think you have not to need to clarify that one. Thank you. Thank you, all of you. Thank you.