Iberdrola SA

MAD:IBE

Earnings Call Transcript 2020-Q1

[Ignacio Cuenca Arambarri, Head of Investor Relations]

[Foreign Language] Good morning, ladies and gentlemen. First of all, we would like to offer a warm welcome to all of you who have joined us today for our 2020 first quarter results presentation. Secondly, we hope that you, your family, friends and colleagues are all safe and well during this global pandemic. Now on to the reason why we are all here. Our Q1 results presentation, which will follow our normal format. Firstly, we will begin with an overview of the results and the main developments during the period given by the senior executive team that we usually have with us. Our Chairman and CEO, Mr. Ignacio Galan; Mr. Francisco Martinez Corcoles, Business CEO; and finally, the CFO, Mr. José Sainz. Following this, we will move on to the Q&A session. I would also like to highlight that we are only going to take questions submitted via the web. So please ask your question only through our web page, www.iberdrola.com. Additionally, we expect that today's event will not last more than 60 minutes. As I'm sure you can appreciate, the logistics for this call are more complex than normal. So we hope that everything runs smoothly, but please bear with us if there are any technical issues that arise during the call. Hoping that this presentation will be useful and informative for all of you, now without further ado, I would like to give the floor to our Chairman and CEO, Mr. Ignacio Galan. Thank you very much again. Please, Mr. Galan.

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

Good morning, everyone, and thank you very much for joining today's conference call. Let me start by hoping you and your families are well and my -- by wishing the quickest recovery for those who have been affected. We are living in an unprecedented times. The crisis created by COVID-19 virus and the measures required to contain the expansion are testing the capability of response of all of us, individuals, companies, institutions and governments. And thanks to the professionalism and sense of duty and effort of the 40,000 women and men at Iberdrola, I can say this group is doing its part to contribute. Since the outbreak of this crisis, we've put in place a comprehensive set of measures in order to preserving the safety of our employees, contractors and customers, securing supply for the population in the industrialized countries and protecting the thousands of jobs that depend on our activity. For our employees, we are implementing all actions required to maintain the distance and security and regular activities and to limit personal interaction. Our investment in digitalization of processes and platforms have allowed the group to have us today over 95% of the office employees working remotely. For those areas, where working from home is not possible, we have taken all precautionary measures to minimize contagion such as working in shift of the separation of teams, always includes collaboration with authorities. In critical infrastructures such as control centers, we have put in place backup facilities, and we have ensured that substitute teams can operate these facilities if required. We are also monitoring critical health facilities such as hospital or nursing homes to ensure continuity of power supply. Thanks to all these measures, we have been able to limit as much as possible the impact of COVID in our employees and contractors, providing all required assistance and support to those who have been affected by disease, in taking the proper surveyance and installation methods to monitor those with symptoms. As today, we have 65 case confirmed out of -- 26 have already recovered and around 500 employees are under precautionary isolation, a figure that has been decreasing over the last week. Sadly, the first decease of an Iberdrola employee was confirmed yesterday. Our thoughts are with his family. I am sure you have already heard me talking about our belief in a social market economy. And today, we are delivering on that statement. We are easing payment conditions for our customers, offering new digital tools, reinforcing our contract centers and implementing new measures directed toward every group, such as elderly customers, including a free-of-charge service in foreign home electric repairs. In parallel, we are working closely with regulators to ensure we are in full compliance with their guidance, especially with vulnerable customers and to obtain access to financial and other support measures that they are putting in place. Action with our supply chains are especially critical given the employment we create with contractors, especially with the massive investment effort we are carrying out. Thanks to the close collaboration between our own teams, on-site contractors and government authorities, we have managed to continue construction activities despite some small interruption that have already been solved in most cases mainly to -- due to regulation in Spain and Scotland. As a result, despite the current environment, we have increased investment by 24% in year-on-year basis, reaching EUR 1.7 billion, and we do not expect any significant impact on commercial operation dates of our projects. In addition, we are doing our best to mitigate the impact of the crisis on our suppliers. In the last week, we have signed multiyear purchase contracts worth EUR 3.8 billion, providing them the visibility they required to maximize access to financing and, most importantly, to avoid any negative impact on employment. Moving to the expected effect of COVID-19 on our business activities. The structural resilience of our model, our mix of geographies and regulatory frameworks constitute a very relevant mitigation factors. In Networks, the impact of demand decrease will be offset, thanks to the revenue, the capital mechanism in place, in most of our distribution companies. In addition, as a regulated activity, governments and regulatory authorities are announcing different measures to compensate impact of higher receivables or bad debt on the balance sheet of networks companies. Looking now into each of our main geographies in more in detail in Spain. We -- the new methodology for distribution approved last year up to 2026 includes this revenue decoupling. As a result, impact will be limited to the timing effect. Additionally, the Spanish government has approved measures to mitigate other effects, including credit lines to cover any loss of system revenues resulting from the temporary suspension or modification of supply contracts. In United States, all of our green distribution companies have different mechanisms to reduce the volatility result delivered from change in demand. As mentioned in our last result presentation, Central Maine Power has reached a rate agreement for 2020, effective in March. In New York, significant progress has also been made. An agreement in principle was reached in February with the staff of the Public Service Commission. This agreement is now being adopted due to COVID-19, and we anticipate new tariffs to be effective in September. However, we expect that the overall terms of the agreement will remain and also the impact of the delay from April to September will be recovered. In the U.K., as you know, current framework for transmission and distribution of RIIO-T1 and RIIO-ED1 already include demand adjustment mechanism. Ofgem has also established mechanism until the end of June to give networks companies the flexibility to postpone certain lower priority works and services. This will be very valuable to avoid penalties linking to the delivery of outputs. Finally, in Brazil, Neoenergia subsidiaries in the Northeast have recently gone through annual tariff adjustment. New rates have been postponed from April to July with compensation mechanisms in place to recover in loss revenue before year-end. In addition, the government has announced that BRL 2 billion will be allocated to provide liquidity to distribution companies, protecting their financial stability and avoiding contagion to the rest of the sector. Looking now into our Liberalized and Renewable business. Demand has affected over the month of March, firstly in Spain and then in U.K., which falls between 10% and 15%. Overall, demand has decreased by 3% in the first -- in the Spain, in the first quarter. Price has followed a similar evolution. However, our integrated business model provides us a significant protection against these market trends. Thanks, our short position in generation. Our hedging strategy with 100% of 2020 hedged and 75% of '21 volumes already sold. And our flexible portfolio, thanks to storage capacity, will give us the opportunity to pan water when prices are lower. In fact, due to this and to the increased rainfall, we have 8 terawatt hours of hydro reserve, 50% above last year in this moment. In retail, over the last weeks, we have registered an increase in receivables, mainly as a result of the flexible payment plans we have offered to our customers and the restriction of movement of people implemented in Spain and U.K. We expect bad debt to remain under control, thanks to our very high share of customers paying through bank account in Spain and direct debit in U.K. In addition, this country has published Ofgem a preparing measure to compensate for increases in bad debt. In addition to this mitigation message implementing low-hour businesses, the conservative financial policy we have been applying for 2 decades is also bearing fruit in this moment. As of today, our liquidity position reached EUR 14.4 billion, enough to cover 30 months of financial need under normal scenario or 21 months under distressed scenario. And we continue having access to financial competitive terms. We already issued EUR 750 million green bond in April, becoming the first Spanish user to complete transactions in this crisis. Demand of this instance exceed EUR 9 billion. In United States last month as well, AVANGRID completed its third green bond obtaining $750 million with maturity of 5 years. Finally, the crisis has driven significant movement in the currency markets. In this respect, aside from the structural protection granted by our currency mix, thanks to the measures taken at the beginning of 2020. Our FX exposure on net profit level is set at around 90%. As you all know, the potential economic impact of this crisis in the short, medium and long term are becoming more relevant week after week. Most governments has already started planning for quick and substantial economic recovery. This V shape everybody is now looking for will be after the contention of the virus, the second victory of our societies. While this accelerated recovery is possible, unfortunately, all international institutions agree on the fact that some specific industries will suffer structural impact in the medium and long term. Therefore, it's essential to identify sectors with potential to act as engines for economy recovery. Competitive industries that are increasing activity naturally and can create sustainable -- just directly in their supply chains without putting additional pressure on public finance. Industries that accelerate on the implementation on long-term strategy priorities for our economies, such as digitalization and ecological transition. Several statements made by European leaders in the last week confirmed this vision. The President of the European Commission has identified the European Green Deal as a key driver for growth and resilience. And Vice President Timmermans has underlined the need to focus on sectors, they will prepare our societies for the future, creating job for this generation and the next. Most European governments are following the same line, and the European Parliament has launched an alliance, bringing together policymakers, business association and NGOs to promote a green recovery. In Spain, the government has already submitted the revised national climate and energy plan to Brazil, reaffirming its ambition, and their Vice President and Ministry of Ecological Transition has been put in charge for the Spanish recovery plan. The acceleration of investment we are confirming today is the clearest evidence of Iberdrola awareness to contribute to this effort, awareness that I have transmitted personally to Spanish and European authorities. Moving on the highlights of the first quarter of 2020, Iberdrola net profit adjusted for nonrecurring items increased by 5.3%, reaching EUR 168 million. The acceleration of the investment, which in 2019 already led to a record figure of EUR 8.7 billion, continues in the first quarter, increasing by a further 24% to reach EUR 1,729 million. This, together with operating efficiency has driven a 5.8% increase in EBITDA up to EUR 2,751 million. We continue combining growth within strong financial position, as shown by all our solvency ratios and our available liquidity, which I mentioned before, reaching EUR 14 billion. On the top of this, on February, we finalized the divestment of our stake in Siemens Gamesa. This transaction has allowed us to absorb the one-off impact already registered in our Q1 results due to the decision taken by the U.K. government to maintain the corporate tax level at 90%, reverting the decrease previously announced. Overall, nonrecurring results registered in the first quarter reached EUR 289 million, delivering our reported net profit figure to EUR 1,256 million, and giving us an additional room for maneuver to compensate potential negative impacts due to COVID-19 in the coming months. Finally, on 2nd of April, we celebrated our Annual General Meeting with a quorum of 77% and all items of the agenda approved by an average of 98%. The General Assembly also approved a total annual shareholder remuneration of EUR 0.40 per share to be paid in 2020 against 2019 results. Focusing now in operating results. As I said, EBITDA increased by 5.8% to EUR 2,751 million, thanks to the performance of Renewables and Generation and Supply. With offset evolution in Networks, in this business, EBITDA decreased by 4.7%, mainly affected by Spain and U.S.A. In Spain, results reflect, as expected, the transition to the new regulatory period and the year-on-year comparison is also affected by some one-off accounted for last year. In United States, EBITDA was impacted by IFRS adjustment related to deviation in demand and energy cost versus regulatory assumptions. As expected, this amount are already reflecting regulatory assets under U.S. GAAP, and therefore, will recover in the coming future with positive impact on cost logistics IFRS result in the next years. Renewable business was up 6.1% due to the contribution of new capacity stalled over the last 12 months. Higher production in U.K., mainly in offshore wind and normalization of offshore wind resource in the United States, boosted by the increase in availability has already reached 97%, the highest levels in the last 5 years. And the increase of hydro production in Spain and Brazil. Today, our hydro reserve in Spain stand at 8 terawatt hours, 50% above previous year's levels. In Generation and Supply, operating results rose by 26.5%, reflecting the increase in production as well as pre-hedge and the impact of lower procurement costs in our short position. In addition, despite complex market condition, result improved in U.K. due to tariff card review enforced in fourth quarter 2019. Despite recent movement in currency market, the overall foreign exchange impact in operating result is not significant as the revaluation of the dollar and the pound offsets the 10.5% depreciation of the Brazilian reals. As mentioned, over the first quarter, investment acceleration has continued reaching EUR 1,729 million, in gross terms, a 25% increase versus 2019. Close to 50% of total investment were allocated to Renewables, with an increase of 47%, mainly driven by the construction of East Anglia ONE in U.K. and the progress of wind and solar projects in Spain. An additional 44% correspond to net gross for a total of 22.7% rise, with gross investment almost doubling versus last year in United States, driven by transmission and distribution in Maine and New York. The remaining 7% correspond to generation and supply, mostly related to capture costs, which are, as you know, capitalized. In the first quarter of 2020, we reached a total customer base of 25.3 million, up close to 1.5 million versus last year. In terms of new capacity over the quarter, we have installed 1,200 new megawatts, 4x the capacity installed in the first quarter 2019 capacity. And this include the East Anglia ONE offshore wind farm in the U.K. with more than 600 megawatts installed by the end of March out of the 714 of the total capacity. I can confirm that last week, we have finished the installation of all wind turbines that will be fully in operation before June: 130-megawatt offshore wind, mostly in United States; more than 70 megawatts of solar photovoltaic in Spain and Mexico; and finally, 780-megawatt in Topolobampo III plant in Mexico. In the last 12 months, we have installed 5,500 megawatts, and we have more than 8,500 megawatts under construction that will be completed mainly over the coming 2 years. Over the first quarter, we have continued focusing on cost control. Net operating expenses to gross margin ratio improved by 150 basis points year-on-year to 23.5%, reflecting the implementation of measures already planned in all areas and also the impact of restriction in mobility and remote working. Thanks to the investment and digitalization carryout in the last year and the dedication effectiveness shown by our employees over the last 6 weeks have not affected our operation. Some of these and planned savings are expected to continue over the coming months. Operating cash flow reached EUR 2,112 million in the first quarter, up 4%, allowing us to accelerate investment and reinforce our financial strength and liquidity. Our FFO to adjusted debt ratio stands at 21.5%, an improvement of 110 basis points versus 12 months ago. On April 2, Iberdrola held the first fully remote Annual General Meeting ever organized in Spain. Despite mobility restriction, attendance reached 77.04%, 3 points above last year, and all items on the agenda were approved by an average of 98%. I would like to reiterate my gratitude to all our shareholders for their participation and support. Following the General Assembly, the Board of Directors approved yesterday the execution of new Iberdrola Retribucion Flexible program in July, which will amount to at least EUR 0.232 per share either in cash or shares. Adding up the interim dividend pay in early February, total annual shareholder remuneration reached EUR 0.4 per share. As usual, to avoid dilution, a share buyback program will be executed, maintaining the number of shares outstanding at 6.24 billion. The buyback program currently under execution related to previous dividend will be finalized by July 2020. I will now hand over to CFO, who will present the group financial results in more detail.

[Jose Sáinz Armada, Chief Financial Officer]

Thank you, Chairman. Good morning to everybody. As the Chairman has said, I wish health to everybody. First quarter results EBITDA was up 5.8% to EUR 2.75 billion, and adjusted net profit grew in line 5.3% to EUR 968 million. FX evolution has been as follows: dollar rose against the euro by 3.3%, the pound by 3% and the real has depreciated 10.5%. Impact is almost neutral at EBITDA level. Adjusted net profit excludes EUR 484 million of the Siemens Gamesa capital gain, which is partially offset by other nonrecurring impacts, especially in taxes, mainly the EUR 159 million in the U.K. as the corporate tax was maintained at 19% versus the 17% initially planned and another impact of around EUR 20 million due to timing adjustments in the U.S. for a total of EUR 179 million. There are another EUR 70 million net increase in customer provisions linked to the COVID-19. After these impacts, reported net profit reached EUR 1,257 million. Revenues decreased by 7% to EUR 9.4 billion, and procurements more than double this decrease to 16.1%, reaching EUR 4.9 billion. As a consequence, gross margin rose by 5.1% to EUR 4.5 billion. Net operating expenses fell by 1.3% to EUR 1.1 billion. Thus, as the Chairman has said, the efficiency has improved by 150 basis points as gross margin grew by 5%. The improvement in net operating expenses is driven by cost contention and efficiency plans put in place in 2019. It has also a positive impact of EUR 25 million as the AGM premium was paid in Q1 2019, and this year, will be paid in Q2. Levies grew by 13% to EUR 726 million, negatively impacted by a EUR 44 million increase in Spanish taxes on Generation, as a 7% general tax was temporarily suspended in Q1 '19 and afterwards reinstated. There is an $11 million increase due to the rise of the ENRESA tax as a consequence of the nuclear agreement in Spain. Other levies rose by another EUR 29 million, mainly linked to the U.S., including property taxes of new renewable assets in operations. Along the year, the lower price environment should reduce levies. This effect, combined with the dilution of the suspension of taxes on generation on Q1 2019 will help to diminish this increase. Analyzing the results of the different businesses and starting by Networks. Its EBITDA fell 4.7% to EUR 1.2 billion, as double-digit growth in the U.K. and Brazil has been more than compensated by a EUR 79 million negative impact in the U.S. due to the IFRS temporary adjustments, and lower revenues in Spain that reduced EBITDA by another EUR 37 million. As you can see in the slide, Spain contributed 31%; Brazil, 25%; the U.S., 22%; and the U.K., also 22%. Analyzing the results more in detail. In Spain, EBITDA -- in Spain, the EBITDA fell 10.6% to EUR 390 million due to the 50 basis points lower remuneration established for 2020 in the new regulatory framework, bringing down revenues by EUR 14 million. And the impact of EUR 23 million of positive settlements accounted for in the first quarter of 2019. In the U.S., IFRS EBITDA, not U.S. GAAP EBITDA, was 23% down to USD 305 million, driven by $91 million, negative temporary adjustments under IFRS as a consequence of negative difference in volumes and energy costs due to an extremely mild winter that nevertheless will be recovered during 2020 and following years. In Brazil, EBITDA grew 21.7% to BRL 1,471 million driven by the tariff revision in Coelba and Cosern in April of 2019 and in Elektro from August. Increasing contribution also from transmission assets as well as cost contention due to efficiency plans. Finally, in the U.K., EBITDA was up 10% to GBP 238 million with higher revenues both in transmission and distribution as a consequence of the growing asset base due to investments. In Renewables, EBITDA grew 6.1% due to -- to EUR 725 million, driven by the strong growth in the U.S. and the U.K. Average installed capacity increased 5.3% with 1,422 megawatts, more than last year. As you can see in the slide, the U.K. contributed 35%; Spain, 25%; the U.S., 18%; IEI, 15%; and Brazil and Mexico, 3 percentage. In Spain, EBITDA was EUR 182 million, 16% below last year, despite a 17% higher output, driven by lower prices in its sales to the Iberdrola supply business. And 29% higher levies due to the reinstatement of the 7% tax on generation after its suspension in Q1 2019. In the U.S., EBITDA increased 21% to $145 million, due to a 30% higher output following the 739 megawatts increase in operating capacity and a higher wind resource. This has been partially compensated by a 29% higher levies, as mentioned previously. In the U.K., EBITDA was 29%, up to GBP 214 million, with higher contribution both in onshore and offshore as a result of the entry in operation of East Anglia. In Brazil, EBITDA decreased 24% to BRL 120 million with a 13.7% higher output, but prices normalizing versus last year's extraordinary high levels. In Mexico, EBITDA decreased 5% to $27 million as a consequence of the 6% lower outlook. Finally, in IEI, mainly Europe, EBITDA grew 1.5% to EUR 108 million due to the higher contribution from Wikinger. Generation and Supply EBITDA was up 26.5% to EUR 760 million, with all geographies growing. In Spain, EBITDA was up by 14% to EUR 445 million, with a 5.7% lower output, both higher purchases and lower prices versus Q1 2019. We continue our active management of our customer portfolio of energy and smart solutions. In Mexico, the EBITDA grew 20% to $222 million, thanks to higher sales, as a consequence of an 11% increased production linked to the 1,777 megawatts new installed capacity in 2019. In the U.K., the EBITDA grew 85% to GBP 81 million, driven by the SVT tariff cap methodology review as well as lower procurement costs despite lower sales. Brazil added BRL 87 million to the EBITDA in a context of business normalization after the one-off negative effect that impacted the results in the first quarter of 2019. And in IEI, EBITDA was EUR 1.4 million negative, improving significantly, but still affected by initial development costs of our supply business in Europe.I would like to stress that we have reached 1.6 million contracts or 88% more than last year. EBIT was up 0.6% to EUR 1.6 billion. D&A and provisions grew 14.6% due to the increase in the asset base and activity around EUR 100 million and EUR 26 million of higher provisions for bad debts in this new environment. Net financial expenses improved EUR 118 million to EUR 180 million, driven by EUR 123 million linked to a one-off of gains in FX hedges. Another EUR 16 million positive impact due to the lower cost of debt that improved 20 basis points to 3.48% and a EUR 21 million negative results due to the higher average net debt. Our reported credit metrics improved in spite of the mentioned debt increase. As the Chairman has explained, our strong financial position is key for the company to continue its financing in the markets in the current environment, with our strong investment plan helping to the economic recovery, while limiting debt increase, thanks to our strong cash flow generation and asset rotation program. On a like-for-like basis and considering homogeneous criteria for IFRS 16 in both periods, adjusted FFO over adjusted net debt improved 1.1 percentage points to 21.5%. Net debt to EBITDA improved to 3.7x from 3.8x. Retained cash flow over net debt improved to 19.7% and leverage ratio was 44.6%. As of 29th of April, we maintained ample liquidity of more than EUR 14 billion, more than fulfilling the rating agencies' requirements with 30 months' coverage of financial needs in our base case scenario and 21 months in the stressed ones. During April, we have increased our liquidity by around EUR 22 billion. Our sources of financing continue to be highly diversified. Currently, the bond market is 60% of the sources. The weight of the bank financing is 16%, giving us opportunity to increase this kind of funding if required. We keep a stable commercial paper exposure of around 6% and super national lenders have another 11% share. Up to date, the group during 2020 has obtained EUR 3.8 billion, equivalent of new funding in different markets at competitive levels even in the current environment and continue with our own green financing strategy. In the bond market, we have issued EUR 1.6 billion equivalent. In the bank market, we have raised close to EUR 1 billion. And in the -- and with development months, another EUR 1 billion. Iberdrola Group remains the world's leading private group in green bonds issued, the most preferred asset class for ESG investors due to the use of proceeds, strict reporting and external verification. Our current asset base and investment plan focused in the energy transition, allow the group to continue taking advantage of the green bond market. In 2020, Iberdrola signed new transactions totaling EUR 1.8 billion of green financing, with high demand at very competitive prices, including EUR 1.5 billion in bonds for a total of EUR 21.9 billion of green and sustainable financing outstanding up to date. In the Annex, you will find also the script dividend calendar. Thank you very much, and I will -- and now the Chairman will end this presentation.

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

Thank you, Pepe. The set of results we are presenting today shows the strength of Iberdrola model. In the first quarter, the company continue accelerating investment, up 24%, even though the restriction created by COVID-19 started in March. Total initial capacity reached 53.3 gigawatts, with an increase close to 3% only in 12 months. Given the expansion of business activity and efficiency EBITDA goes up by 5.8% and adjusted net profit increased by 5.3%, up to EUR 968 million. Looking ahead, even though predicting the consequences of this unprecedented scenario on 2020, full year result is challenging. Iberdrola has analyzed in detail all potential risks from the current scenario, and I can confirm we face the coming month from a robust position. Our current liquidity covered 30 months of financial needs and our mix of geographies, together with the hedges already closed, reduce very significantly our risk pressure to currency fluctuation. On top of this, our activities are mainly focused on regulated networks, which have explained -- as I have explained, have revenue decoupling mechanism, ensuring the recovery of revenues if demand is lower than expected. The recovery is recorded either immediately in the in GAAP or in the following years under international accounting standard. In Liberalized Business, our structural short position in generation, together with the fact that 100% of our 2020 production has already been sold forward, and 50% increase in hydro reserve year-on-year reduce our risk very considerably in the next scenario of decreasing prices and demand. Our Renewable business is also operating with no major impact and the construction of new project continues on track. New capacity that will be commissioned in the coming months together with a positive impact of tariff increase along the coming quarters mainly in United States and Brazil and the reinforcement of cost savings, even including EUR 30 million dedicated to donation of medical equipment will continue to drive an improvement in full year operating results. We are fully aware that the current restriction and the movement of people as well as the economic crisis could impact in the recovery of receivables and potential increase of bad debt, even with extraordinary measures being implemented by the regulators. In addition, as mentioned, the U.K. government decision to maintain corporate tax rate at 90%, canceling the decrease of -- it to 70% plan has also impacted our results. Fortunately, the sale of the stake of Siemens Gamesa has created headroom in our result to absorb the impact of these measures and the potential negative effect of COVID-19. As a result, we are reaffirming our high single-digit growth outlook at the net profit level for full year 2020, maintaining our dividend policy and our financial strength even with a record investment of EUR 10 billion planned for this year. We expect to give you more details about our outlook for coming years in our Capital Market Day, which, as you know, had to be delayed due to the last quarter -- delayed to the last quarter of the year, given the restriction created by COVID-19. To conclude, let me underline that all the actions taken by the company since the beginning of this crisis are fully consistent with our belief on corporate social responsibility. This is the moment for companies to demonstrate they really seek a balanced optimization of the interest of shareholders, employees and associates at large. For shareholders, this result in combined growth, financial strength and clear commitment to dividend, which we know is very significant to the 600,000 people who own Iberdrola shares. And looking ahead, we are maintaining our 2020 outlook and are fully confident on the alignment of our business model with the strategic priorities of the countries in which we operate. This is possible, thanks to our 40,000 -- almost 40,000 employees. After 20 years, experiencing the professionals and dedication, I must say, these days, I am constantly being impressed by the response of Iberdrola's women and men. We have put in place more than 100 health and safety measures in the group to protect our workforce and contractors from contagion. In addition, we are accelerating recruitment of new personnel and reinforcing training and development with new online resources. And finally, during this crisis, we are also promoting new initiatives in line with our commitment to social dividend. Having committed close to EUR 30 million of donation in -- of medical equipment, offering a new flexible payment option to our customers or boosting job creation through accelerating investment in anticipation of almost EUR 4 billion in purchase to our suppliers. To finish, let me underline that at Iberdrola, we are fully -- share the vision that exiting this crisis will require reinforcing the resiliency and the inclusiveness of our societies. And this will only be possible if we focus resources and sectors aligned with the strategic priorities. Sectors that can create sustainable and qualified employment, La digitalization and energy transition. The contribution of everyone will be needed and you can be sure that Iberdrola will rise to this challenge. Thank you very much. And now we are ready to answer any questions you may have.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

So moving towards the Q&A session, we are starting with the first question coming from Javier Suarez, Mediobanca and Stefano Bezzato, Crédit Suisse. What would be the COVID-19 impact on your net income target for 2020, excluding the offset from the capital gain of Siemens Gamesa? Do you feel the necessary to revisit your dividend policy on getting targets as a consequence of the COVID-19-related economic deceleration?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

With [indiscernible] result of the divestment of Siemens Gamesa and U.K. government decision to maintain corporate tax at 19% along with other minor [indiscernible]. We expect full year EBITDA to grow broadly in line with first quarter. At this moment in time, we don't have any information that leads us to change it.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

The second question comes from Meike Becker, Bernstein and Jorge Guimarães, JB. What is the expected impact of COVID-19 on the remuneration of the U.S. networks? Could you please elaborate in more detail on the COVID-19 impacts in Brazil and how this might be compensated by the regulator?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

We expect the impact to recover through revenue decoupling mechanism. As I mentioned, in the U.S. GAAP will be registered in the accounts of the year. In the IFRS, it will be properly registered. And we are now negotiating to be able to reach as well. But if not, it will be already registered in the following years. In the case of Brazil, the situation is very similar, but as well in Brazil, they are already been faced with there already in providing liquidity to the companies to a special loan, which are already [indiscernible] for the cash for already helping the companies to keep their liquidity in the right condition and not be effective to the balance sheet.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Next question is related again to COVID-19 effects as expected, and it's coming from Alberto Gandolfi, Goldman Sachs; Stefano Bezzato, Credit Suisse and Jorge Alonso, Societe Generale. Sorry, we are going to repeat the second question-answer due to the microphone of the Chairman was off. Sorry again.

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

So I was saying is, Meike Becker from Bernstein and Jorge Guimarães from JB, we expect that the impact on the -- in other words will be fully recovered through revenue decoupling mechanism. In the case of United States, that will be registered in our accounts of 2020 U.S. GAAP. And we are in this moment in talks to manage as well to be registered in the IFRS in the rest -- in the consolidated account. But if not, that will be already in the following years registered. In the case of Brazil, a part of that [indiscernible], which as well is on the same basis, which can be registered through a regulatory asset in the accounts of 2020. But also, the government has already provide certain liquidity mechanism for already compensating the companies and avoiding them. They will remind this debt in the balance sheet.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Okay. Now moving to question #3 is coming from Reto Gandolfi, Goldman Sachs; Stefano Bezzato, Credit Suisse; and finally, Jorge Alonso, Soc Gen. Can you tell us what would be the worst-case scenario you see on the big correction, no payments and risk of negative working capital swings for the year, estimated impact from bad debt, if possible?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

So we are already managing the situation in the sense of 2 things. For one side, we are providing this -- giving this facility to the investor to the customers to flexibilize the payment. And from other side, in some cases, certain of those customers are not allowed to pay because they are not allowed to leave their homes. Of the people -- so -- but I think that is, in the case of certain countries with mostly the bills are already paid through their banks, we feel that the situation can be easily be managed. In the case of those, which we have to -- either they have to pay by check or we have to go to their home for cashing, I think the situation should be more difficult. And that is why we are uncertain in those countries. We are in talks with the regulators for already -- finding already ways of compensation. That's the case. For instance, in Connecticut, we have to already -- allow us to register all the extraordinary cost incurred as consequence of the situation. And in the case of Brazil, what we are in talks as well with them, how we can already make some kind of action to compensate it. So I think we are on work on that one. But nevertheless, I think we have already -- still our, let's say, cushion of the capital gains we have already give us confident that we will have money enough for covering this thing. We have already put, as you see already in our account, saw an extra provision in the range of EUR 30 million or EUR 40 million for bad debt, which is included in the first quarter already. So I think in the worsening scenario -- if we are seeing the worse scenario, we can cover all those things with the extra capital gain we have already in this month.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

So we apologize again to the audience and due to some connection and noise that we have noticed about it. We are going to repeat the first question and the answer to the question one, okay?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

The first one, you can repeat again?

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Yes. The question comes from Javier Suarez, Mediobanca and Stefano Bezzato, Crédit Suisse. The text is as follows. What would be the COVID-19 impact of your net income target for 2020, excluding the offset from the capital gain of Siemens Gamesa? Do you feel the necessary to revisit your dividend policy and gaining targets as a consequence of the COVID-19-related economic deceleration?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

I'll start with the last one. We -- as I mentioned, we are not already planning to make any changes in our dividend policy. We are maintaining our commitment with the shareholders and to keep the dividend, to grow the dividend in line with the growth of the net profit. In terms of our result, I think the guidance we make is on the profit level. But in a level of EBITDA, our expectation is that the net -- the EBITDA grows at similar level in line with the first quarter. So I made very simple numbers. I think first quarter, I think we have already March, we -- has been affected by COVID. In January, February has already had normal months. If we have already -- that gave us room for 4 months as bad as the first -- the March -- in 8 months with a normal condition. So now the situation we expect and we hope then the things are moving in the -- to the normality in step-by-step by moving, not in the situation we've been facing in some countries in which March and partially in April has been practically closed all businesses. Now it's going back to the activity. And so I think our expectation is that EBITDA grows in the same level as we are already -- been growing at the first quarter for all the reasons you know, more power generation, more hedges in our liberalized business, all the electricity sold, short in electricity, et cetera, et cetera. I don't repeat all the things I've already said before. So I think with those things, net profit, in that case, with the cushion we have already with the actual capital gain, I think, give us the comfort to keeping all this in the line I was mentioning.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Question number 4, related to Renewables. The covering scenario is coming from Martin Young, Investec; Fernando Lafuente, Alantra; Javier Suarez, Mediobanca; Meike Becker, Bernstein; and Jorge Alonso, Soc Gen. How do you think that the ongoing deceleration may affect your plan to develop renewable synergy and energy infrastructure in your main markets? Given the large number of orders for investment you have placed and the clear support for suppliers, have you been able to secure pricing discounts?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

So I think -- I don't understand very well your question. I think our plan is clear. I think it's all the input we are receiving now is that the acceleration of the green investment will be absolutely needed for leaving from this economic crisis. So that is what is being said by United Nation Secretary General. That has been said by the President of the European Commission. That has been said by the Vice President Timmermans. That has been said by the Spanish government, the [indiscernible] government. Everybody is relying in green, green, green economy and transformation of that one. And that gave us an opportunity, and that is what we are trying to do, accelerating our investment instead of delaying our investment. I think we are fortunately, even during this period of crisis, all business has been affected, most business has been affected, but we've been considered as essential service, and we have already had all kind of support and flexibility in most countries for continuing our activity. That's why we are already not only maintain our investment, we increased our investment in the first quarter by 24% over previous year. We have already put in service 4x more power than previous year in the same quarter. And our construction of the 8.5 megawatt, which we have in construction, continues in good shape, and we are not foreseeing delays in the -- in operation. The fact, I think I mentioned, East Anglia ONE, that is one of the driver of our growth in terms of result, East Anglia ONE. Last turbine has been already erected last week. So nothing now is probably in the next 4, 5 weeks, the 714-megawatt, our last offshore wind farm will be fully generating cash flows and fully generating results.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

The next question is a kind of follow-up regarding to Renewables and comes from Alberto Gandolfi, Goldman Sachs. Can you give us an update on Renewable auctions? Do you envisage any delay in U.S. offshore or elsewhere?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

Well, our -- the offshore project, it takes -- I think first thing, what I've seen in the last week is the case of United States, every time, more and more states are already fixing their own targets for offshore and for renewable of energies. So as you know, the process for development of an offshore wind farm takes years. So I think it's -- this one, what we can say is the United States, we have a portfolio of almost 7,000 megawatts. And I think if that is many of those, if we would like to make, tomorrow, we will have not all the process and the permits and the things for making those things like that. I think in this moment, in the United States, the 2 offshore wind farm. We have been -- now been awarded, 1 from Connecticut and 1 from Massachusetts. I think the expectation of the first one, the permits of Vineyard is by the end of this year. So the plan of this one is -- can be already in operation by 2024. And another one for Connecticut, which is beside. The plan is will be fully in operation in 2025. So that means that they probably, I think, is already this Vineyard is delayed already on the initial plan. We were planning to have that one by 2023 and is going to be 2024 and another one, the plan was 2024, 2025. So I think we are not seeing that problems in -- the auctions can be already delayed. So because we have already time enough for making already all the necessary step for achieving all the permits for being able to present to this auction. And in the 2 ones we are in construction, I think it's in line with the last expectation was 2024, 2025, which I do know is different of the initial one, which goes slightly earlier than these dates.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Question number 6 comes from Martin Young, Investec. What are you asking of them, U.K. government, to offer by way of bad debt protection for B2B supply. By way of comparison, the water regulator has proposed the measures. Number six.

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

Well, I can say, I think we are in continuous along with the regulator with the Ministry of Energy & Industry. So I think it's a continued talk with them. They are aware of the problem. And -- but still, they are not -- already any solution. The only thing I have -- we've been a lot in positive to be -- I mentioned in my speech, a temporary flexible scheme for all the activities related with networks for -- in case we can already suffer any kind of delay in our work. But I think as much I can say is that they are already aware of the problem. We are in talk with them, and we will be able in due time to look for some kind of solution. Either in the area of retail, either in the area of networks, which some of the step has been taken, especially in this one of the -- not to be effective for the potential impact that any delay as consequence of that one can affect to the construction of the works of -- on the networks.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Number 7 comes from Sam Arie, UBS. And he would like to know if our confirmation of the net profit outlook in the Slide 14 refers to the outlook for 2020 only, or if at this stage we feel comfortable reconfirming the midterm growth guidance as well until the year 2022.

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

Well, fortunately, we are ahead of our plans. I think we are almost 3 years ahead in our dividend targets, and we are almost 2 years ahead in our net profit target. So I think that is something which is more that -- we will give you more details in the Capital Market Day. But I think for the time being, we can say that we are ahead of the plans, and that's why we give us certain room for the next year's plans as well.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Number 8 comes from Alberto Gandolfi, Goldman Sachs. Do you see the risk of social tariff implementation in any of your geographies?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

Well, I think probably, we have never had such a fluid dialogue with all the authorities in all countries, and we are already having now. I think they're going very easy. So I think there are not very many sectors we can act -- a structure of the economy in a recovery. And they are not -- and I think we are one of the sector, which we are not only a constructor of the recovery, but also, we are fully fitting on the strategies of most of the countries in this green recovery. So that's why I think it's -- we need already, as is happening in Brazil, they are already trying to reinforce our balance sheet for already being able to continue making the investment with the country required. That's why I think we are confident that we will already been able to deliver, would have to be delivered in terms of investment and to contribute as much as we can to the recovery of the country we have already presence. That's why we are already advancing the -- our purchase to our vendors for keeping the people in place to continue working and not to be forced to make redundancies as in most another sector has been doing. In our case, I announced as well our plans of increasing our number of recruitment with almost 4,000, 5,000 people during the year for precisely being able to absorb and to manage the investment and the new operation either in Renewables, either in Generation, either in networks in the different country we are already present.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Question number 9 comes from Jorge Guimaraes, JB; and Antonella Bianchessi, Citigroup. There is a mention of the presentation about 2021 volumes being 75% hedged. Exactly which volumes per client category are you mentioning? Is it possible to provide the price comparable to pull prices for us to have an idea of the price range versus the market?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

Paco, can you reply?

[Francisco Martinez Corcoles, Group Business CEO & Executive Director]

Yes. If you want more exactitude, we have already sold a level of production of 77%. And that's -- accounts for a quantity of 46.5 terawatt hours. And the price is at the similar prices that we have already sold this year, and that is well above 70% -- EUR 70 per megawatt hour. So it's as much information as I can give you right now.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Thank you, Paco. Question number 10 comes again from Jorge Guimaraes, JB. Is it possible to provide some insight about the level of protection on the Brazilian reals, namely up to which euro Brazilian real rates is the company protected?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

You can already make that.

[Jose Sáinz Armada, Chief Financial Officer]

Yes, below BRL 5 per euro.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Question 11 comes from a few people, Fernando Lafuente, Alantra; [indiscernible] Bloomberg; Javier Suarez, Mediobanca; Stefano Bezzato, Credit Suisse; and finally, Manuel Palomo, Exane BNP. Can you please provide an update on your expectation of the future, the impact of COVID-19 on working capital across your businesses? Where do you expect net debt to be as of the end of this year?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

So as I mentioned in my speech, we -- this -- the bad debt of this receivables is -- we expect it is going to increase and that makes ourselves to increase EBITDA debt. But as well, our cash flow generation can already compensate a bit that one. We feel that we are going to finish by the level of around EUR 39 billion of debt. But our ratios, net FFO net debt and net debt to EBITDA, we expect to be more in line with last year. So we cannot be already change much or will be more or less in line.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Number 12 from Antonella Bianchessi, Citigroup. Would you consider -- reconsider your renewable growth in light of the current spot and forward power prices? Number 12.

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

Will you consider...

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Your renewable growth in the light of the current spot on forward power crisis?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

Yes, I can see -- I said already, I think it's -- all the inputs we are receiving is this recovery has to be green. I think yesterday, Board -- and I was making already just a brief of the different speeches of the different agents in the different countries, political agency in different countries. And the common word is green, green, green and a transformation of the economy in most sustainable, more renewable. The green deal is mass in Europe. In Spain, the minister in charge of this recovery plan is thereby pressing for any transition. So everywhere, and I think it's an area that we can really provide funds without being requesting money from the national budget, which I think all the countries is going to -- already a very difficult situation. And they require sectors will fit in the strategic goals and at the same time, we don't require already much public funds because this public fund will have -- will be needed for another areas, which cannot be covered by the private investors. I think in this case, we are fitting both things. We can already -- we are fitting in line with their targeted goals in terms of making already more sustainable, less dependent countries in terms of energy for third parties. Cleaner and cheaper. And the second one, that will not require funds from the national budget. That is what is already -- and that's why I think my position and our position is that is not only a threat. That is a great opportunity for acceleration of the investment in this sector. That's precisely what the company is doing, and that is what we are foreseeing, and that is what we plan to do, and that is what we continue doing.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Next question, 12 plus 1, is coming from Manuel Palomo, Exane; and Alejandro Vigil, Cygnus. Could you please update on us on the renewal of electricity contracts in Spain? Should we expect a major decrease in final achieved clients as a result of the recent power price drop?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

So I think most of our electricity in the Renewables is solved through our commercial organization. So I think is almost only around -- 30% is already market-driven. The rest is already just managed in this manner. So -- and I think we have not seen this one. I think what we are making most of the -- in the case of Spain, the Renewable we are making, we are already selling through PPAs, in some cases, but not through our commercial organization. We have thousands of people. We have millions of customers, and that is what we are making. In some cases, they are -- we are making contracts with PPA, with certain organizations for a long time. In other cases, we are already making in much real-time. So I think that this part as we have already with the rest of our power generation. Renewables is no different than the rest of our pre-generation in this regard.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

And related to Paco, the number 13 as well, the current market situation in liberalized about the new contracts that we are renewing. We have the new signs that we are doing.

[Francisco Martinez Corcoles, Group Business CEO & Executive Director]

Well, as you know, all -- as you all know very well, the market -- the price market is moving. The key word in this moment is volatility. So we are seeing forward market prices going up and down. And recently, the market price has the forward, has recovering more than 10%. So within this volatility atmosphere is even more important to hedge the prices, and this is exactly what we are seeing with our customers. So our operations continue more or less in the same basis as it was before the COVID-19 starts. And now we are in continuous contact with customers, with new customers for the new projects, and we sold customers -- with customer for the old projects. And the operations continue, and we are still selling the energy. And the level of prices of forward is exactly related to the market that is nothing to see with the spot market. So just to summarize, exactly in this moment of volatility or high volatility is more important to hedge. This is what our customers are seeing, and this is what we are offering, and we are matching both of us as it was. So we do not expect any influence or any problem derived from this movement of the prices.

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

[indiscernible] when you are in the middle of a storm. So people which are in the middle of the storm is looking for those, we can already provide already safety, security, the solidity, a good place. And that is what we can offer. I think we are a company solid. We are a company reliable. We are a company which we are already committed, delivering what we are committed and that in this moment, the customer is even appreciating more than ever. And that is what we are foreseeing in the different places in different countries where we are. Okay?

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Question number 14 comes from Rob Pulleyn in Morgan Stanley, and is related to M&A. Does the current environment offer opportunities for acquisitions and consolidation, given either FX moves and/or the challenges faced by smaller companies operating in the same atmosphere as Iberdrola?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

I was surprised that this question hasn't been passed yet. So he's here. So as you can imagine, in this moment, in our list of priorities is not precisely looking for M&A. I think we are fully dedicated for first, keeping the safety, all our employees in our collaborators, providing the electricity to our customers, continue with the investment with the purchase to our vendors to flexibilize the things, the payment to those customers, which are already in a difficult position and trying to deliver the plans that we are already just saying announces today. It's not in our head in this moment to look for those opportunities, but because we are fully, fully dedicated to another thing, which is more already according with the present circumstances.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

Question number 15 is slightly difficult to be answered. But comes from José Javier Ruiz with Barclays. Mr. Galan, you have always been a visionary in the sector. What significant paradigm change do you expect in the sector in the new post-COVID-19 world?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

Well, I think it's -- I leave a situation very badly many years ago when I was already part of the -- reconverting the shipyard into aeronautics. In a very, very deep situation with the event of unemployment on the high 20s in the country where I was living. And I think we made here just a plan, we was transformed completely the country was in today is the most active and dynamic region of Spain. And this was the plan 3R. And the plant 3R goes -- to identify: which business has already a future, and we gave the support to this business; which business are obsolete or has no future, and we do the necessary for suffering the less as possible in this transition period; and for looking for new sectors, which can already provide already more wealth in the future. So I think now it's a good time for making an analysis in the countries, in Europe, in general. And that is what we analyze in this moment. So I think many, many months ago, we make already in the ERT, we make a document which was called the European Industrial Renaissance. So -- and we're already foreseen those things, which sectors in Europe can -- is not -- which sectors we can already help for already making the things better. So I think now Europe has already focused in a few sectors. One of those is our sector. And our sector has a great opportunity. Europe is already fully dependent or mostly depending of energy supplies to other countries. We are seeing the problematic. We are suffering with -- we are depending in other country. We have the opportunity of being self-sufficient, almost self-sufficient in energy in Europe. We have already -- we can already -- we have a good industry in Europe of Renewables, especially in wind, but we can already develop an industry as well in solar. What -- we can already develop in industry in batteries for storage. We can already -- very good industry in electric equipment. We can already have a huge potential of that one. And I think in a few years, my feeling is that we can already achieve even the European target for the carbonization. Even earlier, we already all of us grow in the same direction, trying to accelerate the renewables, networks, storage, hydrogen, whatever needed. So for transport, electrification of transport, for cooling and heating in the homes to make already more efficient than it is today. And that, at the end, will make Europe industrially more powerful and in terms of the external dependence of our external energy demand will diminish on these terms. So I'm optimistic that if we make the things public, that can be used as an opportunity for doing the things better in Europe and transforming the Europe in more a better circular economy and a much more reliable in all terms.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

The last question is coming in Spanish. And if you don't mind, we are going to answer in Spanish as well. [Interpreted] As a business person that has managed many crises in the past, how do you think that Iberdrola will overcome this scenario, in particular in Spain?

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

[Interpreted] Well, I fully trust in our situation of strength, and we've experienced previous situations in many different fields, and we've always been capable with our workforce has been able to adapt to these new environments and has been able to overcome any difficulties. And I think that the case that we're looking into right now is something that you can see on a daily basis. And I mentioned this in Spain, and we'll be getting back to normal little by little. And yesterday, we reached an agreement with the trade unions. We agreed to a gradual normalization plan, always meeting the requirements we set from the very beginning. That is the safety and health of our workers and collaborators. We have to maintain essential services. That's one of the crucial things in many areas. And at the same time, what we also have to do is generate more activity and more jobs. And I have to stress that. So this is why our approach is that we're not only not going to stop investing, but we're going to continue with our investments. And I've already said that in Q1, we've increased them by 24%. And we're not only not going to reduce our workforce, but we're going to hire another 5,000 people in the entire group, and we're going to increase our investments that last year totaled EUR 8 billion, and this year is going to be over EUR 10 billion. And we've brought forward purchases totaling nearly EUR 4 billion. So that they do not have to apply redundancy schemes, but rather so that they can continue to work with these contracts and not lose anything in the process. And it's true that our results in all countries have gone very well or have gone well. And in Spain, they have been affected by lower situations in which there's been a drop of 7% in terms of net profit because of an increase in the payment of levies as the CFO pointed out because of the regulatory cutbacks and the distribution networks and also because of the impacts that have been produced by low levels of activity in the month of March. But we are optimistic as regards the company and the end of the year. And while we know that the investments that we are making together with the efficiency measures, we've already implemented. And together with the diversity of countries and markets and the hedgings we have for exchange rates and currency impacts and the capital gains that we've also obtained. Due to divestitures, we know that we'll be able to maintain our growth expectations in terms of results. And that means that our 600,000 Spanish shareholders can please be sure because we are going to pay the dividend that we'd already committed in previous years.

[Ignacio Cuenca Arambarri, Head of Investor Relations]

We did the last question and answer, we have answered the 16 question we have already received, so all of them has been answered. The event has lasted slightly more than the initially expected due to this fully commitment with your questions. And now let me please give the floor to Mr. Galan to conclude the -- this event.

[Jose Ignacio Sanchez Galan, Executive Chairman & CEO]

So thank you very much for this opportunity of sharing with you the result of the company in this very particular and tough situation. And I hope that the things is going to go better in the next few months. And we will be in touch with you in the next -- in July when we present the second quarter result, then I expect then the health and the situation of all your families and everybody will improve in this period. Thank you very much for your attendance. And if there are any questions more, our Investor Relations people will be ready to reply to you. Thank you very much. [Portions of this transcript that are marked[Interpreted] were spoken by an interpreter present on the live call.]