July 24 (Bloomberg) -- Iberdrola SA, Spain’s biggest utility, reported first-half earnings that exceeded analyst estimates after booking gains from a revaluation of assets.
Net income totaled 1.73 billion euros ($2.29 billion) compared with 1.76 billion euros a year earlier, the Bilbao-based company said in a statement. That beat the 1.47 billion-euro average estimate of 10 analysts surveyed by Bloomberg.
The utility, which has expanded abroad to lessen the impact of government levies and weaker power demand at home, booked a 1.46 billion-euro gain from corporate taxes after revaluing assets, the company said. It revised the value of Spanish assets higher by 6.3 billion euros.
Iberdrola rose 0.8 percent to 3.99 euros as of 1:25 p.m. in Madrid trading, having earlier advanced 2.2 percent.
The company reported 1.66 billion euros of writedowns in its gas-storage and wind-energy units after shale-gas growth in North America led to a decline in gas costs, dragging down power prices. Iberdrola delivers gas and electricity to about 3 million customers in the U.S.
“The main surprise in results came from the provisions line that included massive impairments,” Banco BPI SA said today in a report. “Expectations at operating level and one-offs mostly compensating each other; we do not expect this set of results to be a trigger for a move in consensus.”
The shares slumped earlier this month after Spain announced power-market reforms that will cost utilities 2.7 billion euros.
The measures will cost the company an estimated 170 million euros before tax this year and 90 million euros in 2014, Iberdrola said today in a presentation. The industry’s debts, a result of selling power below cost and subsidizing renewable energy, have discouraged investment in power distribution, Chairman Ignacio Galan said on a call with analysts.
Sales slipped 0.9 percent to 16.8 billion euros, Iberdrola said in the statement. Earnings before interest, taxes, depreciation and amortization fell 0.9 percent to 4.05 billion euros. Financial costs dropped 7.9 percent as the company cut net financial debt to 28.8 billion euros from 32 billion euros.
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