Bloomberg News

Acciona Cuts Investment By One-Third, May Delay Profit Goal

October 26, 2011

(Updates with comments on profit from first paragraph.)

Oct. 26 (Bloomberg) -- Acciona SA, the Spanish construction firm that transformed itself into the fifth-biggest wind-energy producer, said it’s cutting investment spending and may reach its profit target two years later than planned because of the financial crisis.

Acciona will invest less than 1 billion euros ($1.4 billion) a year through 2013 compared with the 1.6 billion euros set out in its 2010 business plan, Chairman Jose Manuel Entrecanales said in an interview today. The company targeted 950 million euros in pre-tax profit for that year.

“There’s a significant reduction in our investment projections; however it’s still in absolute terms very significant investment,” Entrecanales said in an interview at a conference in Barcelona. “The bulk is in energy.”

Acciona, which also builds infrastructure and water treatment plants, has frozen investment in the U.S. because utilities aren’t willing to pay enough to generate adequate returns on windfarms, and next year’s presidential election raises uncertainty about government support for clean energy.

The shares closed down almost 0.92 percent at 69.75 euros in Madrid.

“A significant amount of investment was going to go into the U.S., which is now being put on hold until we see what happens in their regulatory framework next year,” he said. “There’s going to be permanent shifting in countries depending on regulation.”

Turbine Projects

U.S. installations of wind turbines rose 79 percent in the third quarter compared with the year-earlier period with 1,204 megawatts of new generators put up, the American Wind Energy Association said yesterday. The current system of tax credits expires next year.

“The regulatory risk in the U.S. is high,” said Eduardo Tabbush, a wind energy analyst at Bloomberg New Energy Finance in London. “A Republican win in the presidential election might have a huge impact.”

Acciona will need to finance about 70 percent of its planned investments, Entrecanales said. The company has already financed all its current projects and has no need to borrow more for the next 12 months, he added.

“Everything that is being started or that is being finished or under way is financed,” he said. “We have no significant expirations and no significant refinancing. Over the next 12 months, I am not concerned.”

The company aimed to raise earnings before interest, tax, depreciation and amortization to 2.3 billion euros by 2013 in last year’s plan. That target may be reached 18 to 24 months later than planned should the current financial conditions persist, Entrecanales said.

--Editors: Reed Landberg, Will Wade

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net

To contact the editor responsible for this story: Ben Sills at bsills@bloomberg.net


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