Iberdrola Sa S/Adr

Buenos dias, señoras y señores. 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 2025 nine-month results presentation. As usual, we will follow the traditional format given in our events. We are going to begin with an overview of the results and the main developments during the period. Everything given by the top executive team that is today with us. Mr. Ignacio Galán, Executive Chairman. Mr. Pedro Zagra, CEO. And finally, Mr. Pepe Sainz, CFO. Following this, we'll 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. Finally, we expect that our event will not last more than 60 minutes. If any questions remain unanswered, we at IR Team are, as always, fully at your disposal. 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 Mr. Ignacio Galán. Thank you very much, Eklem. Please, Mr. Galán.

Good morning, everyone, and thank you very much for joining today's conference call. In the first nine months of 2025, our reported net profit reached 5,307 million euros, leading up to a 17% increase in adjusted net profit, excluding capital gains from national rotation. This growth was driven by robust operating performance. We reported a bid that reached $12,538 million, mainly in our net worth business, where a bid that rose by 26%, thanks to a higher rate base driven by investment and improvement regulatory frameworks. A bid for renewables and customers was impacted by lower market price and higher ancillary service costs in Iberia due to changes in the system operation after the blackout, which we are gradually passing through, partially offset by the contribution from additional renewable capacity. Investment reached new record of 9 billion euros in just 9 months, reflecting the execution of our plan. Networks investment increased by 12% for a total regulatory base of close to 50 billion. And we have added 2,000 megawatts of new capacity in the last 12 months. Driven by additional investment, operating cash flow increased by 10% to 9,752 million euros. which, combined with €8 billion of new asset rotation and partnership and the capital increase of last July, has allowed us to reduce the consolidated debt by €3.2 billion to €48.5 billion, substantially improving our ratios in line with our BBB Plus rating. The strong operating performance and the ongoing improvement in our financial position have led us to increase international holder remuneration by 8.2% to €0.25 per share. Reported EBITDA reached 12,438 million euros driven by the strong performance of our network business up to 26% in the past nine months, supported by higher regulated assets in all countries, especially in the Kingdom of Brazil, and positive rate adjustment mainly in the United States and Brazil as well. As mentioned, a bit of renewable power in customers was affected by the one-off impact in the change of system operations applied by Roth Electric in recent months as more synchronous generation has been introduced, which is impacting our retail business in the short term until these costs are passed through. In addition, we saw a lower market price and a lower contribution from Mexico after the last year's transaction. All these impacts were partially offset by additional renewable capacity. Nervos is once again the main contributor of our EBITDA, driven by the continued growth in our US and UK, which increased their combined share by 12 points, reaching 43% of the total EBITDA. Reflecting the 13% increase in investment made in both countries, which together represents 60% of the group total of September. As a result, total investment reached a new record of 9 billion euros, up 4% year-on-year. By business area, 60% of investment were allocated to networks, where we invested 4,904 million euros with a 12% increase year-on-year. Networks investment increased by 45% United Kingdom to 1,524 million euros driven by the integration of ENW and 80% increased investment in the Scottish Power Transmission and Distribution. Investment in United States reached 1,739 million in line with the last year as the 9% increase in distribution was offset by the increase in transmission investment due to the gradual completion of NCEC. Additionally, we invested 1,215 million euros in Brazil, up 14%, and 426 million euros in distribution in Spain, 60% more than last year. As a result, our regulated asset base grew by 20% on year-on-year to 49.3 billion euros. Investment in renewables reached 3,442 million euros, well diversified across geographies and technologies. 60% was allocated to United Kingdom and United States, with UK investment increasing by more than 45%, mainly linked to our offshore wind farms, corals, and reconstruction. It's Anglia 3, with 1,400 megawatts of capacity, and it's Anglia 2 with 900 megawatts. Our offshore wind farms, under construction in other countries, are also making good progress, with more than 50% of binyard wind once 806 megawatts already in operation in the United States, and 315 of the Bin-Dakar wind farms in the German Baltic Sea advancing as scheduled. Investment in onshore renewables reached 1,104 million euros, with 62% in onshore wind. And we invested more than 300 million in storage, including both pump hydro in Iberia and batteries mainly in Australia. Moving to network business performance, regulatory framework continue to evolve positively across key geographies. In United Kingdom, the Rio ED3 methodology for distribution was published, representing a first step in a process that will lead to a new framework by April 2028. And in transmission, the Rio T3 draft determination was released, as you know, and we have expected final determination before the year end. In the United States, current rate cases have resulted in a 10% average increase in tariffs in New York and Maine compared to last year, and Avangrid is already in the process of new rate cases in both states that will be effective for May 2026. As mentioned, NCEC, our interconnection project between Canada and Massachusetts, is on track to reach full commercial operation before year-end. And we are already working on new projects that will continue delivering growth in transmission, mainly the port in New York, which will result in 1,750 million euros of planned investment in the coming years. In Brazil, following the annual update in Neonergia Brasilia, rates have increased an average of 8% compared with last year, and the renewal of distribution concessions continues to progress. The concession of Neonergia Pernambuco was redesigned, and we expect the other distribution companies to follow in the coming months. In transmission, Neon Energy is on track to complete the last four lots under construction by December 2025, increasing the annual remuneration in this business by R$ 600 million to more than R$ 2 billion per annum. Finally, in Spain, the process of the review of the remuneration methodology and the rate of return continue. Moving to renewables, in the last 12 months, we have installed over 2,000 megawatts, with significant progress in offshore wind. In United Kingdom, production of our offshore wind farms in operation, west of Dandongshan and Nishanglia 1, exceed 2,400 HWh in the first nine months of 2025. And we continue progressing the construction of Nishanglia 3, with 20 monopiles already installed, and Nishanglia 2, where preliminary works are underway, after having signed all major procurement contracts. On top of this, our Isanglia One Nord project with 900 megavolt was qualified for the upcoming IER7 auction, scheduled by mid-November. In United States, the construction of Binger Wing One is now above 50% completion, with 32 turbines fully installed and more than 200 gigawatt hours produced. Finally, in France, a brief project produced 1,150 gigawatt hours during this period. And the output of our offshore wind farm in operation in German Baltic Sea reached 1,594 kWh as well. As mentioned, in Germany we have another project of deconstruction, Windacker, which is moving ahead as planned for commercial operation in 2026. Over the last 12 months, we have also installed 1,350 MW of onshore technologies well spread across our geographies, one-third in the United States and UK, including 200 MW of repowering projects, around one-third in Spain and the remaining third in another European countries and Australia. Finally, in storage, we continue progressing with our pump hydro project and the construction in Iberia, including Torrejon Valdecañas, with 15 GWh capacity. In Australia, the Smithfield Battery project is already in operation. The Broad Sound project is progressing as planned for the total of 490 MWh of storage capacity. All in all, we have currently close to 5,500 megawatts under construction, of which more than half correspond to offshore wind project and 25% to onshore wind. And we are very well positioned to capture additional growth if demand accelerates due to the electrification, thanks to a strong pipeline of 4.5 gigawatts of advanced projects ready to start construction by 2028, including repowering projects mainly in the United States. Through September, we have also continued improving our financial strength, thanks to a 10% increase in our operating cash flow to 9,752 million euros, driven by higher cash generation in net worth, and the execution as well of our asset rotation and partnership plan. Since January, we have signed transactions worth 8 billion euros with a positive impact on 4.5 billion euros in our net debt as of September. On asset rotation, as you know, we have already received close to 1.1 billion euros from the sale of our smart meters business in United Kingdom. We have signed other transactions, like the sale of our renewable business in Hungary, which will allow us to collect 128 million before the year end. Finally, the regulatory approval required for the sale of our Mexican business continues on track. Regarding partnership, we have added 708 MW to our joint venture with Norges Bank for renewables in Iberia, reaching 900 MW in operation, fully on track to reach 2,300 by 2027, with a total co-investment of 2.4 billion euros. Our partnership with Gansai, in the Windacker of short wind farm in Germany, will represent a total co-investment of 1.3 billion. And our partnership with Masdar, of Ford of short wind in the UK and Germany, which will result in co-investment of 6.8 billion, is also progressing well. With the construction of Sangler III moving forward in line with our plan as explained, and the Baltic Eagle in Germany already energized. Increasing cash generation and the execution of our asset rotation and partnership plan, together with the capital increase executed last July, had led to a reduction of 3.2 billion euros in adjusted net debt, yet to date to 48.5 billion, driving even better stronger financial ratios, fully aligned with our 3B plus credit rating. FAO to adjusted net debt increased by 330 basic points to 26.2%, and net debt is already less than three times EBITDA. We also maintain a strong liquidity position of 23 billion euros, sufficient to cover 25 months of financial needs. Thanks to our strong business performance and improving financial strength, the Board has approved an 8.2% increase in interim dividend of 0.25% euros per year will be paid at the beginning of this year. As always, a supplementary dividend will be proposed for approval at the International Hall of Admitted Pay in July. I will now hand it over to our CFO, who will present the group financially starting for the detail. Thank you.

Thank you, Chairman. Good morning to everybody. Adjusted net income for the first nine months of the year, excluding the sale of the UK smart meters, accounted for in this quarter, which is the capital gain is 381 million euros gross, and the same number net, as we don't have a tax impact here, and including the cap allowance in 2025. which is 191 million euros, reached 5,116 million euros, representing a 16.6% increase compared to the adjusted net income for the first nine months of 2024, excluding the divestment of the thermal generation assets, which impact that the net profit was 1,165 million euros net, and including the UK cap allowance for 24, which is 81 million euros, as you can see in the slide. Excluding also the recognition of costs in the US for 389 million euros, as it is a non-CAS item, the first 9 months of 2025 growth is 8%, reaching 4727 million euros. The main perimeter change, as you know, is that ENW has been fully consolidated since March. The FX evolution has had a minor effect on results thanks of our hedging policy, with the dollar 2.5% lower and the real 10% lower. Reported net profit for the first nine months of 25 reached 5,307 million euros, decreasing by 3% year on year, affected by the asset rotation that I have just mentioned, that has been 784 million euros less in 25 than in 24. Revenues increased by 2.3% driven by the network business. Procurements rose 2.6% and gross margin grew 2% reaching 18.4 billion euros. Excluding the capital gains from the asset rotation, as I mentioned previously, which is referring to the smart meter divestment and the thermal generation assets, nine months net operating expenses improved 7% affected by lower storm costs and also lowers the gross margin. Net personal expenses rose 0.4% due to higher number of employees. External services declined 6.1% mainly due to the 330 million euros lower storm costs. Other operating income increased by 21% compared to the adjusted 9 months of 24 due to the indemnities of past year costs. The ENW consolidation partially offset by 121 million euros, negative impact of the East of Anglia III sale, 4 million more than in the first half results due to a negative impact accounted in Q3. As you will see later, this impact is more than offset at the financial expenses level. Excluding the mentioned storm-related impacts and other adjustments, net operating expenses improved by 0.8%. Analyzing the results of the different businesses and starting by networks, Ezebita grew 26% to €6,128 million, mainly driven by the strong performance of the UK and the US, linked to a higher asset base and past cost recognition. In the U.S., EBITDA reached $2,046 million, 88% more, with a 10% average higher rate in distribution and a better contribution from transmission. And positively affected since the first quarter by the decision of the New York regulator that allowed to register a regulatory asset on their IFRS regarding past costs, which have already been accrued and recorded on the U.S. GAAP, aligning both standards. It is worth highlighting, as the Chairman has mentioned, that NECEC finally is expected to start contributing from November of this year. In the UK, EBITDA increased 22.5%, reaching £1,129 million, including seven months' positive ENW contribution of £253 million, with growing results for transmissions driven by a higher RAB. In Brazil, EBITDA was up 12.6% to R$ 10,000 million, thanks to the higher revenue in distribution linked to higher inflation and an average 8% increase in rate reviews over a higher asset base. In addition, transmission contributed positively with R$ 1.3 billion gross margin as construction progresses. And as the Chairman has said, it is expected to finalize all the construction of the transmission lines this quarter and will contribute €2 billion in 2026, already fully completed. In Spain EBITDA increased by 9.3%, reaching €1,340 million, positively affected by the CNC draft retribution rate of 6.46% versus the previous 5.58% and by positive adjustments to past year's remuneration. In these first nine months, energy production and customer business EBITDA reached 5.9 billion euros versus the 6.7 billion in last year, excluding capital gains from asset rotation. The business reached 86% emission-free generation. In Iberia, EBITDA was 3,052 million euros, 17.5% down, with higher production, more than compensated by lower margin and sales, explaining 30% of the year-on-year variation. and higher ancillary services, higher levies, and positive court rulings in 24, despite 1.2% revenue tax termination, explain the remaining 70% of the decrease. Hydro reserves remain above the 10-year average. In the US, EBITDA remained flat, reaching $813 million, supported by improved wind and solar performance, despite the fact that 24 was positively impacted by an Arctic blast storm one-off of $34 million. In the UK EBITDA grew 5.3% to £1,136 million, driven by the £324 million capital gain from the UK smart meters divestment in this quarter. Excluding them, the business decreased 24.8%, with lower wind resources and prices, and weaker supply business, also driven by lower prices. Net operating expenses including £103 million negative one-off impact linked to the East of Anglia 3 sale, more than compensated at the net financial result as I have mentioned. In the rest of the world EBITDA grew 31.5% to 588 million euros with 61% higher offshore production due to higher contribution from wind farms, St. Brooks in France and Baltic Eagle in Germany with lower supply results due to the 30 million negative impact in Portugal due to the ancillary services cost as in Spain as a consequence of the blackout. In Brazil EBITDA fell 23.6% to 947 million reais with lower renewable and thermal production compared to last year. Finally in Mexico EBITDA reached 467 million dollars decreasing 78.5% with lower reported contribution compared to last year that included the thermal asset capital gain. Depreciation and amortization and provisions were up 2% to 4,272 million euros, driven by higher asset base despite the full year 24 adjustments impact and lower bad debt provisions, mainly in Spain. EBIT reached 8.2 billion euros and grew 6%, excluding capital gains. Net financial results worsened 93 million to 1,445 million euros, driven by 208 million higher debt-related costs, due to 7 billion higher average net debt in the first nine months of the year. While interest rate... related costs and effects improved by 85 million euros due to the effects depreciation especially of the real and derivatives had a positive contribution of 244 million of 34 million euros due to the east of anglia three derivatives as i mentioned compensate the lower the lower net operating expenses while the rest has had a negative impact, mainly due to the Mexico hedges, mainly linked to the positive impact of the Mexico transaction last year, compensated at the net profit level in the tax line. Cost of the debt improved 12 basis points, mainly thanks to lower short-term interest rates in euros and British pounds, and to the depreciation, especially of the real, despite higher interest rates in Brazil. At the end of September, net debt is 3.2 billion lower than the 51.7 billion reported in the 24-year end, reaching 48.5 billion. This positive evolution was driven by 9.8 billion FFO generation, plus 4.5 billion asset rotation and debt consolidation, and a 5 billion capital increase. more than covering the 9 billion CAPEX and the 4.1 billion dividend, as well as 2.2 billion ENW net debt consolidation. As a consequence, our K ratios are at a very strong level in the BBB plus band. Our adjusted net debt to EBITDA is below three times. The FFO adjusted net debt reached 26.2% and our adjusted leverage ratio is 43.3%, two percentage points lower than at the end of 24%. Nine months, 25 adjusted net profit grew 17% to $5,116 million, taking away also U.S. cost recognition, which is a non-cash item. As I commented, the growth is 8%. And now the chairman will conclude the presentation. Thank you.