February 21, 2018 / 12:28 PM / in 6 months

UPDATE 1-Shares in Spain's Iberdrola hit by lacklustre profit growth outlook

(Adds stock reaction, analyst comments)

By Jose Elías Rodríguez

MADRID, Feb 21 (Reuters) - Shares in Spain’s Iberdrola fell 3.7 percent on Wednesday as concerns about lacklustre profit growth and a flat dividend over the next four years overshadowed its 32 billion euro ($39 billion) investment plan for the period.

Iberdrola, which supplies energy to more than 30 million people in countries including Spain, the United States and Britain, said it planned to book a net profit of between 3.5 billion and 3.7 billion euros in 2022.

The forecasts implied compound annual growth of 5.7 percent in the next four years compared to an earlier company prediction of 7.5 percent from 2016 to 2022, RBC Capital Markets said.

Iberdrola, which also reported a 7.8 percent drop in annual core earnings that was lower than expected, recommended a 2017 dividend of 0.32 euro per share and said its 2022 profit forecast implied a 0.40 euro per share dividend for that year.

RBC Capital Markets said earlier company forecasts pointed to a dividend of 0.37 to 0.40 euro per share for 2020, meaning there was hardly any increase.

The firm said its four-year investment plan would focus on networks, renewable energy and Mexican power purchase contracts.

By 1154 GMT, shares in the firm which is based in Spain’s Basque Country were down 3.7 percent at 5.92 euros, their lowest in a year.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) fell to 7.32 billion euros, hurt by drought in Spain and sterling’s depreciation against the euro.

Hydroelectric production in Spain has plunged because of low rainfall in 2017 that has left rivers and reservoirs dry.

Revenue in Iberdrola’s networks business in Britain, where it owns Scottish Power, fell 7.4 percent on lower demand and margins.

Net profit rose 3.7 percent to 2.8 billion euros, compared with a Reuters forecast of 2.59 billion euros, buoyed by capital gains from a U.S. tax reform.

The company booked a one-off capital gain of 1.28 billion euros in 2017 from the U.S. tax reform, but most of this was used as provisions to adjust values of some assets, it said. ($1 = 0.8121 euros) (Writing by Sonya Dowsett; Editing by Paul Day and Edmund Blair)

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