UPDATE 2-Iberdrola slashing investment and jobs to curb debt

Wed Oct 24, 2012 7:14am EDT

* Looks to reduce debt by 6 bln euros to 26 bln

* Investments reduced by over a third

* Workforce reduced by 1,200

* 9-month net profit 2.4 bln euros, in line (Adds details of strategic plan)

By Sonya Dowsett and Paul Day

MADRID, Oct 24 (Reuters) - Spanish power firm Iberdrola plans to slash investment, sell assets and chop its workforce over the next two years to help it reduce its debt by 6 billion euros ($7.8 billion).

Iberdrola said it aimed to cut debt to 26 billion euros by 2014, as it joins the ranks of other Spanish companies such as Telefonica and Repsol who are working to preserve their investment-grade credit ratings.

Spain's sovereign investment grade is hovering above "junk" status as Europe-imposed spending cuts restrict an already battered economy, and the nation's woes are trickling down to corporate Spain.

Iberdrola, the world's largest operator of wind farms, hopes to maintain profit at 2011 levels in 2014, disposing of 5 billion euros of assets and reducing its workforce by 1,200, it said in a presentation to analysts in London.

The utility plans some 2 billion euros in disposals, including assets in non-strategic countries, and said it had identified a further 3 billion euros of potential divestments, without giving further details.

Analysts have said disposals could include a minority stake in its UK electricity grid, part of its U.S. business, wind farms and stakes in Portugal's EDP or Spanish wind turbine maker Gamesa.

The group said it was committed to keeping the percentage of profits dedicated to dividend payments at 60 percent and said it would offer shareholders an average annual payment of 0.30 euros per share.

By contrast, Telefonica scrapped dividend payments earlier this year as it conserves funds to reduce its debt in a dire domestic economic environment, one of many Spanish blue-chips to reduce payouts to shareholders.

Iberdrola's strategy aims for average EBITDA (earnings before interest, tax, depreciation and amortisation) and net earnings for the 2012-2014 period in line with the 7.65 billion euros and 2.8 billion respectively it made in 2011.

Investment will be slashed to 3.5 billion euros per year, meaning a reduction in over a third from the 2009-2011 period. Reduced investment will focus on power grids and increasing spend in Britain.

The plan was unveiled the same day as the company reported nine-month net profit of 2.4 billion euros, in line with analysts' expectations and up 12 percent on a year ago.

Iberdrola shares were little changed, up 0.031 euros at 3.910 euros. ($1 = 0.7714 euros) (Editing by Tracy Rucinski and David Holmes)