ScottishPower owner Iberdrola yesterday cut its forecasts for profit growth following a weak set of 2011 results that showed UK demand for its electricity and gas falling steeply.
UK gas sales fell by 18 per cent, although its customer base held steady at two million. It shed some 100,000 electricity customers, to three million, while demand fell 5 per cent.
Alongside lower electricity margins, this led to a 40 per cent decline in profits before tax and other impairments at ScottishPower’s retail and generation business to €322.5 million (£273m). The company said results would improve this year as margins recovered. Its regulated transmission and distribution business grew profits on the same basis by 4.2 per cent to €832.3m, due to “increased investments and cost control”.
Net profit at Iberdrola fell 2.3 per cent in the year to December to €2.8 billion, slightly below analysts’ forecasts, as it was also hit by higher commodity prices.
The Spanish giant has been expanding in semi-regulated sectors like wind power and electricity networks to compensate for falls in its traditional energy business. But strength in fast-growing Brazil was not enough to offset the weak UK figures and a disappointing renewables performance in Spain and the United States due to rising costs.
The firm cut its 2012 net profit growth target to under 5 per cent, compared with previous guidance of between 5 per cent and 9 per cent.