By Pietro Lombardi
MADRID (Reuters) -Spanish utility Iberdrola (BME:IBE) on Wednesday raised its profit target for the year after a strong first quarter on the back of high renewable output in Spain and tariff increases in its network business in the U.S. and elsewhere.
It now expects high single-digit profit growth this year, from previous guidance for growth of between 5% and 7%.
First-quarter net profit rose to 2.76 billion euros ($2.95 billion) from 1.49 billion euros a year earlier, thanks to asset sales.
Europe's largest utility by market cap is reaping the benefits of its strategic shift towards upgrading and expanding grids in the United States and elsewhere while taking a more selective approach to renewable energy.
Last month it presented a $45 billion investment plan to build on this strategy, which it launched in 2022.
Like Italian competitor Enel (BIT:ENEI), the Spanish firm is attracted by the stable and predictable returns offered by grids at a time when the renewable sector has been hit by high interest rates, rising debt costs and supply chain issues.
Excluding one-offs such as a 1.2 billion euro gain in the quarter on the sale of some of Iberdrola's assets in Mexico, profit rose 28% and core earnings - before interest, taxes, depreciation, and amortization - 10%.
Investment in the quarter reached a record 2.38 billion euros, of which 1.2 billion euros went to networks, mainly in the U.S. The company's network business benefited from improved tariffs in Britain, the U.S. and Brazil.
Strong output at its hydroelectric plants pushed renewable energy production in its Spanish home market to a 10-year high, it said, while offshore wind capacity was added in France and the U.S.
"We have started positively in the delivery of our strategic plan to 2026," Executive Chairman Ignacio Sanchez Galan said in a statement.
The company will invest 12 billion euros this year after record spending in the first three months, he said.
($1 = 0.9345 euros)