Oct. 27 (Bloomberg) -- Iberdrola SA’s nine-month profit rose 3.5 percent and exceeded analysts’ forecasts as it trimmed financing costs, helping offset reduced power generation in its biggest markets.
Spain’s largest power company reported net income of 2.14 billion euros ($3 billion), compared with 2.07 billion euros in the year-earlier period, according to a company filing today. Profit of 2.08 billion euros was expected, according to the median of four forecasts in a Bloomberg survey.
“Across the power industry companies are reducing their financing costs as they cut capex plans and trim costs,” said Chris Rogers, a utilities analyst with Bloomberg Industries in London. “That reduces their debt and in turn their interest costs.”
Iberdrola’s total power output slipped 5.8 percent as demand in Spain and the U.K., where the company has about 60 percent of its generation, was curbed by government austerity measures as officials strain to keep their borrowing costs in check. Stresses in the sovereign debt market are feeding into corporate bonds yields, which may make it harder for utilities to sustain improvements in net financial expenses, Rogers said.
“Bond yields have started to rise, which means future financing costs may be higher,” he added.
The shares rose 2.6 percent to 5.33 euros at 9:41 a.m. in Madrid.
Sales rose 1.7 percent to 23.39 billion euros and earnings before interest, tax, depreciation and amortization advanced 0.4 percent higher to 5.59 billion euros.
--Editors: Todd White, Will Kennedy
To contact the reporter on this story: Ben Sills in Madrid at firstname.lastname@example.org
To contact the editor responsible for this story: Reed Landberg at email@example.com