(Recasts adding details from slides, conference call)
By Francesca Landini and Massimo Gaia
MILAN May 8 The world's biggest cable maker,
Prysmian, said it could not rule out further losses due
to technical problems at its Western Link high-voltage project
in Britain, which hurt first-quarter results and its 2014
Its shares dropped after Prysmian said adjusted core profit
fell 32 percent in the first three months of 2014 to 78 million
euros ($108.1 million) after a 37 million euro hit linked to
problems with the project.
The company estimated that delays in completing the
large-scale cable manufacturing project would cost it 70 million
euros in lost margins this year and warned further losses could
"Despite the current uncertainty over the recently
identified technical problems, the directors believe at present
that there is no element to suggest that contract costs will
exceed contract revenues," it said in a statement on Thursday.
"This does not preclude that after further analysis and
technical testing ... evidence might emerge that will lead to
the recognition of additional losses in coming quarters."
Shares in the company fell 6.5 percent to close at 17 euros
on the Milan bourse as analysts and investors said the fall in
profits caught them by surprise.
"First-quarter results and full-year guidance are worse than
expected," one analyst said.
The group, which overtook France's Nexans to
become the world's largest in the sector in 2011, said it
expected adjusted earnings before interest, tax, depreciation
and amortisation (EBITDA) of 530 million to 580 million euros
for the year.
That target was down from a guidance of 600 million to 650
million euros for last year, which analysts had expected to be
confirmed for this year.
The 2014 targets also included the negative effects of
currency swings and an expected fall in average prices compared
with last year, the company said in slides published after the
The difficulties at the Western Link project emerged just a
week ago, Prysmian Chief Executive Valerio Battista told
"Our technicians are already seeking to overcome
difficulties and resume work on this very complex project," he
In the first quarter, total sales amounted to 1.58 billion
euros, up 3.2 percent on a like-for-like basis and excluding
metal price and exchange rate effects.
($1 = 0.7214 Euros)
(editing by Jane Baird)