Iberdrola Sa S/Adr

Buenos días, señoras y señores. Good morning, ladies and gentlemen. First, we would like to extend a warm welcome to all of you who have joined us today for our 2026 first half results presentation. As is customary, we will follow the traditional structure of our events. We are going to begin with an overview of the results and the key developments during the period The presentation, the Q&A part, will be delivered by the top executive team joining us today. Mr. Ignacio Galan, executive chairman, Mr. Pedro Azagra, CEO, and finally, Mr. Pepe Sainz, CFO. After the presentation, we'll move on to the Q&A session. I would like to remind you that we will only be taking questions submitted through our website. Please send your question exclusively via www.iberdrola.com

Thank you very much, Ignacio. Good morning, everyone, and thank you very much for joining today's conference call. In the first half of 2026, reported net profit increased by 22%, reaching 4,336 million euros, and adjusted net profit up 8% to 3,565 million, reflecting strong operating performance up to June. Adjusted EBITDA rose by 7% to more than 8 billion euros, driven by net loss up 13% due to tariff increases and higher asset bias in all geographies. Adjusted EBITDA in power and customer increased 1% due to higher production and margin, especially in the second quarter, and the contribution of panel storage, which already accounts 35% in our total hydro generation. Investment rose by 25% to more than 7 billion, with 72% allocated to UK, the US and Brazil, including the acquisition of the energy minorities. Net worths accounted for two thirds of the total investment, driving 11% increase in our regulated taxes base to 55 billion euros. In power customers, up to June, we have commissioned 1,600 additional megawatts. and we are accelerating the addition of new capacity due to increasing demand across our geographies, especially in the US. This is also driving governments and regulators to approve new frameworks to guarantee the availability and sufficient power and the reliability of transmission and distribution networks. In Europe, in the last week the Commission has published the CREEDS package to increase networks investment as well as several incentives to reduce taxation on electricity in a new electrification action plan with very ambitious targets to double electrification rates. The UK also continues showing full commitment to electrification with increasing visibility on the need of additional investment in transmission and distribution supported by attractive remuneration schemes. Finally, in Brazil, the renewal of distribution concessions for 30 more years was signed, reaffirming the country's attractive regulatory outlook for the coming years, and supporting our recent acquisition of energy and minorities for 1.1 billion euros, as mentioned. In this context, our increasing investment during the first half, we have also continued preserving our financial strength with an FFO to adjusting the debt ratio of 22.4% and a liquidity of more than €21 billion. As you know, yesterday we announced the acquisition of Caruna Networks, the largest electricity distribution company in Finland, with an enterprise value of €5 billion. Under the agreement, we will acquire 80% of the equity Karuna for €2 billion, which €1 billion will be paid in 30 months, and the remaining €20 billion stake will continue in the hands of two Nordic investment and pension funds. Karuna operates two distribution areas with major activities around Helsinki, the main government area in Finland and Joensuu. In total, Karuna has 89,000 km of land, almost 70% underground. The transaction that we expect to close in the first quarter of 2027 perfectly fits our strategy-focused and regulated networks. With the rest of the investment of our remaining Mexican power plant, we will be exchanging thermal generation for fully regulated companies with an asset base of 2.5 billion euros. That serves to more than 20% of the electricity distribution in Finland, a country with Dove Alt Plus rating in Eurozone. With a stable regulation and a strong demand growth prospect given the ambitious electrification target set by the government to reinforce energy security insufficiency. As a result, Finland's system operators estimate demand growth between 22% and 45% up to 2030. which will require a strong increase in generation. For instance, the system operators estimate the wind capacity will multiply by more than three times in the next 10 years, reaching 30 gigawatts by 2035. To secure the network investment required to support this growth, Finland has set an stable and predictable regulatory framework for electricity distribution until 2031, which attracted conditions, including an average return on equity of around 8%, 100 basic points to give you an example above Spain. The transaction will also have a positive impact on our results and growth prospects. It will be accretive from day one and we expect a sustained long-term growth of around 7% per annum in the net income thanks to additional investments up to between 200 and 300 million euros per annum. With further upside due to electrification, the expansion of data centers, and the possibility of the low 400 kilovolt transmission lines opened by the Finnish regulator earlier this year. Finally, given its size, its regulator profile, with supportive framework, and its cash flow generation, there is more than enough headroom for this transaction in our current credit ratios. All in all, this deal is an excellent opportunity to accelerate the execution of our strategy by increasing our exposure to regulated networks in a country with a high rating, attractive regulation, and significant growth prospects. Coming to the numbers of the presentation, adjusted EBITDA increased by 7% to 8,050 million euros supported by a stronger performance in the second quarter compared to the first quarter. Networks adjusted EBITDA reached 4.2 billion euros in the first half, up 13% compared to 9% increased in the first quarter. Empowering customers registered in adjusted EBITDA of 3,100 million, up 1% year-on-year, driven by positive dynamics in the second quarter. By geography, in the UK EBITDA rose by 14%, supported by the higher contribution of transmission following the beginning of Rio T3, as well as a strong increase in production, up to 27%, thanks to the onshore and offshore wind. In the UX, excluding the one-off impact of network passcode recognition in 2025, a bid increased by 6%, thanks to a higher rate in New York and Connecticut and the contribution of the NCEC interconnection line between Massachusetts and Canada. In Brazil, a bid grew by 90%, driven by a tariff increase in distribution and the new transmission line in operation, as well as the good performance of power and customers. In Spain, EBITDA is up by 2% thanks to a strong hydro output mainly from palm storage, which has allowed us to increase production and maintain our reservoirs close to record levels of 73% of the total capacity, equivalent to 8,300 HWh of energy store. Finally, the BINDA in other European countries and Australia was affected by the impact of sanitary service costs in Portugal and the sale of our own shore activities in Hungary and France, despite an overall 13% increase in production mailing of shore in Germany and France. All in all, 83% of our BINDA comes from ARA countries. Regarding effects evolution, the depreciation of the dollar and the pound against the euro has a negative impact of 106 million euros as of June on the operating result. This means that excluding this effect, the increase in EBITDA would have reached 9%. Investment in the first six months were up 25% to 7 billion euros, with 72% in the UK, the US, and Brazil. 30% of the total investments were made in the UK, mainly in transmission and distribution networks. 70% in the US, with increasing investment in distribution and offshore renewables offsetting the completion of NCEC and Billiard Wind One projects. And 24% in Brazil, including the acquisition of neo-Nueva York minorities. Spain represented 14% of the total investment, and Australia and other EU countries remaining 13%. By businesses, network continue to be our main investment destination, accounting for nearly two-thirds of the total. To reach 4.4 billion, up to 42% year-on-year, mainly driven by UK, we represent one-third of the total network investment after 43 increase driven by transmission. The US account by 22% of the total as ongoing investment in distribution partially offset the impact on CEC project when it's completed. The contribution of Brazil reached 40%, including 1.1 billion euros due to the acquisition of the United Majorities, as mentioned. And Spain represents 7% of the total investment. As a result, our regulated asset base rose by 11% in the last year to 55 billion, thanks to the double-digit increase in the UK, US, and especially Brazil, where RAP rose by 18%. Transmission was once again the key growth driver, with RAP up 30% in just one year, driven by Rio T3 in the UK and CEC in the US and the completion of the last transmission lots in Brazil. Distribution RAP increased by 6% to 40 billion euros, well spread among geographies. Investment in renewables reached €2,234 million with 72% allocated in wind, including €700 million in offshore mainly in East Anglia II and III, in the UK, Windhaken in Germany and Binger Wind I in the US, and more than €900 million on onshore wind mainly in the other European countries and Australia. We also invested around €330 million in solar PV and €300 million in storage and others. All in all, up to June we have put in service 1,600 megawatts. And we expect to accelerate the additions of capacity from the second half of the year, supported by the demand growth and the strong appetite for PPAs. As a result, by the year we will install 2.1 gigawatts, more than 50% is only a three option wind farm in the UK. We have another 2.2 gigawatts already under construction, two-thirds in US and UK, plus three gigawatts more ready for final investment decision in the coming months. Half of them in the United States mainly corresponding to repowering and life extension. and other 4GW in advanced development that could be ready by the end of the decade. This means that capacity addition by 2030 can reach up to 15.5GW significant fleet versus 9.5GW between 2025-2028 included in our plan. This increase in trend investment is all being reinforced by governments and regulators who are taking additional measures to secure the availability of power and the reliability of network infrastructures to obtain all the benefits of electrification in terms of energy security, self-sufficiency, and competitiveness. In the European Union, only in the last few weeks, the Commission has published an ambitious grid package to increase networks investment through faster permitting and additional incentives. and the Electrification Action Plan, which sets a specific electrification target of 46% by 2040, doubling current levels in just 15 years, which could also mean multiplying total demand by two in the period. The Plan announces measures to incentivize heat pumps, electric vehicles, and charging infrastructures, and proposes the elimination of subsidies to fossil fuels and a strong reduction of taxation on electricity, in line with several Commission recommendations that have been recently published in the United Kingdom. Rio ID.3 continues progressing as scheduled, with objective framework decisions already published. And the independent system operator has issued an updated plan beyond 2030, showing that network investment will continue to increase strongly in the next decade. In Brazil, following the renewal concession for 30 more years, Neonergia doubled its investment plan in distribution in the next five years to 50 billion reais, which represents 9 billion euros. Mainly in Bahia, where a few weeks ago I could see personally a huge increase in power demand, driving by the electrification of the western part of the state and the industrialization of agriculture and other sectors. In the U.S., new rate case progress as expected. For example, in New York, where the regulator recently put $2.2 billion investment for this year and confirmed the new tariffs we expect to close by year end will have retroactive effects in May. And in Australia, we continue to sell to see full support to electrification from federal and state authorities are reflected in new auctions in generation storage and transmission. In terms of financial profile, our FFO net debt ratio reached 22.4% and net EBITDA is 3.5 times fully consent with our triple B plus rating. And our liquidity stand at 21.5 billion euros covering 20 months of financial needs. As you know, our last AGM approved a dividend per share corresponding to 2025 result of €0.685, equivalent to a total dividend payment of €4.5 billion, 12% more than previous year. Accordingly, next Monday, we will pay €0.427 per share as supplementary dividend. The average vote received in ADM was 97.9%, with a quorum of 73.6%. Let me for so thank you all our shareholders once again for their participation and support. Now you, Pepe, explain the result in more detail. Thank you.

Thank you. Thank you very much, Chairman. Good morning to everybody. The first half reported net profit grew 22%. to 4,336 million euros, and the adjusted net profit grew 8% to 3,565 million, supported by a 7% increase in adjusted EBITDA to 8 billion euros. Since last year, the dollar has depreciated 6.8% against the euro, the pound 3.1%, while the real appreciated 4.6%. As a consequence, FX has had a negative impact on the P&L, excluding it, as the Chairman has commented, adjusted EBITDA growth would have reached 9% and adjusted net profit growth 14%. The adjustments to the reported P&L, which are limited and aligned with our guidance definitions, are the following. First, regarding Mexico, in according with IFRS 5, Mexico is classified as discontinued operations. Therefore, its contribution is excluded from the BIDDA in both reported and adjusted results. At the net profit level, Mexico is presented under discontinued operations in the reported accounts, while in the adjusted figures, It is reflected on the equity line. As a consequence, in the second quarter, we have excluded the positive capital gain of €950 million from the sale of the remaining business to Cox, which is the main driver of the difference between reported and adjusted net profit. Second, as usual, UK capital allowances are adjusted at net profit level in 25 and 26. Finally, US past course recognition. in 25 is excluded from the adjusted net profit of that year, 530 million euros gross, 389 million euros net in line with the definition applied in our 25 guidance. You can find all these effects explained in more detail in the annex on slides 32, 33, and 34. Adjusted revenues increased 4.2% after adjusting the recovery of U.S. past costs in the first half of 2025. Procurements rose by 4.8%. This resulted in a 4% increase in adjusted gross margin, improving the 1% decrease reported in March. Excluding the negative FX impact , adjusted gross margin would have grown 6%. First half net operating expenses are 1% lower year on year and 1% higher excluding the FX impact of 71 million euros. ENW is included for the whole first semester versus last year that was accounted from March onwards. Net personal expenses increased 7.7% as the second quarter of 25 included some positive non-recurring impacts. External services grew 2.6%, another operating income improved and Maria Dolores Arambarri. Analyzing the network business, its adjusted EBITDA grew 13% to 4,213 million euros, driven by strong performance in all geographies due to higher asset base, especially in the US, the UK and Brazil. Excluding also 53 million euros FX impact, adjusted EBITDA would have grown 14%. These investments in networks are making electricity available for households and industries, which is critical for the future of the economy and the energy independence. In the US, IFRS adjusted EBITDA increased 19% to $1.2 billion, excluding the $550 million passcode recognition booked in the first half of 25, included in the reported figures. Underlying performance benefited from higher rates in distribution and a stronger contribution from transmission, including NECEC following January COD. In the UK EBITDA increased 24% to £924 million with increasing contribution from transmission driven by the new Rio T3 framework in place from April 26 onwards and higher contribution from ENW versus last year as consolidation started in March 25 while in 26 is consolidated for the whole first half. In Brazil EBITDA grew 7.1% to 7.2 billion Brazilian reales, improving from the 0.7% decline reported in March, driven by higher revenues in distribution due to better tariffs and demand, together with a higher contribution from transmission. In Spain EBITDA increased 7% to 154 million euros, driven by the new regulatory framework and adjustments from past years. Ferha's 26th Power and Customer Business EBITDA reached €3.8 billion and grew 1%, improving 3% fall at March, thanks to Spain and the US. During the semester, Iberdrola produced 61 TWh of electricity, with a 92% sourced locally and fully emission-free, advancing in the energy self-sufficiency while strengthening the availability and the reliability of supply. This demonstrates the importance of combining local generation and robust networks to provide the secure, resilient, and competitive energy system needed by the new economy. In Iberia, EBITDA was 1.9 billion euros and grew 1.5%, improving the 3.2% fall in March, with higher electricity sales and margins in Q2, more than compensating the lower prices, higher ancillary costs and the negative contribution of the regulated gas rate. As of June 30, Iberdrola had 8.3 TWh hydro reserves. Pumping represented 35% of hydro production and should continue to help the results in the second half of the year. In the UK, EBITDA increased 11.9% to £774 million, thanks to higher wind resources, both on onshore and offshore, more than compensating lower prices. The supply division had a positive contribution In the US EBITDA increased 3.5%, reversing the decline reported in March to $525 million, with higher contributions from wind and solar assets, with stronger prices and output, more than offsetting the negative timing effect versus 2025. In the rest of the world EBITDA decreased 18% to 337 million euros affected by the sale of Hungary and France, lower power prices and higher ancillary services costs in Portugal. In Brazil EBITDA increased to 661 million reais with higher contribution from the client business partially offset by lower renewable contribution. Depreciation and amortization and provisions grew 2%, reaching to 2,824 million euros. The evolution was mainly driven by the larger asset base and provisions. Adjusted EBIT grew 10%, improving from a 1% decline at March, reaching 5,226 million euros. Excluding the 52 million euros adverse effects impact, growth would have reached 12%. Net financial results increased by €508 million to minus €1.1 billion, mainly driven by the negative derivative impacts, especially in the second quarter, reflecting the Q2 2025 East of England III positive one-off of €282 million, and FX hedges linked to exchange rates as they were positive in 2025 and negative this year. All of this is despite a €2.8 billion lower average debt. Debt costs increased 44 basis points, mainly reflecting higher interest rates and higher percentage of debt in Brazilian reales, which is linked to inflation, compensated at the EBITDA level as revenues in NEO are inflation adjusted. Excluding the real, debt costs fell three basis points to 3.5%. Net debt increased 3.8 billion euros versus full year 25 to 54 billion euros, mainly reflecting high rate replacement and currency appreciation. The evolution also reflects the strong effort in CAPEX, including the 1.1 billion euros acquisition of minority shareholders in Q2. Partial SEV by FFO generation and asset rotation proceeds. Iberdrola maintains strong and resilient credit metrics, fully supportive of our BBB Plus BAA1 rating. This financial strength allows the group to continue investing while preserving balance sheet flexibility. Our adjusted net debt to EBITDA remained at 3.5 times. The adjusted FFO versus adjusted net debt reached 22.4%. And our adjusted leverage ratio was 45.3%, improving the 46.8% in the first half of 2025. First half, 26 adjusted net profit grew by 8% to 3,565 million euros compared to the 3,308 million euros in adjusted net profit in the first half of 25. Excluding the 290 million euros FX impact, adjusted net profit would have grown by 14%. While reported net profit grew 22%. The difference versus adjusted net profit is mainly explained by the 1 billion euro capital gain from the Mexico transaction recognized in Q2, partially offset by capital allowances in the UK. Neo-minority shareholder purchases had added 164 million euros to the net profit. And now the chairman will conclude the presentation. Thank you.