May 13, 2019 / 6:07 PM / 11 days ago

Prysmian can't rule out further problems at WesternLink

MILAN (Reuters) - Italy’s Prysmian said on Monday it couldn’t rule out more faults at its WesternLink project after it hiked provisions last month due to problems on the submarine connection.

The world’s largest cable maker has struggled for years to overcome technical difficulties with the high-voltage infrastructure connecting England and Scotland, which have weighed on its shares and pressured its results.

Last month, the company officially restated its adjusted core earnings for 2018 to 767 million euros ($861 million), after lifting provisions on WesternLink by 70 million euros, following a new setback for the underwater powerline.

Chief Executive Valerio Battista told analysts on Monday that repairs on the fault, which occurred on April 6, would be completed by the end of this month.

“Will this happen again? We don’t know,” he said.

“On a 600 kilometer long line like WesternLink another problem could occur, though it is not written anywhere,” he added.

Despite recent faults at WesternLink, Prysmian stuck to its 2019 core earnings target of between 0.95 and 1.02 billion euros on Monday, after first-quarter earnings before interest, tax, depreciation and amortization (EBITDA) topped expectations, driven by its telecoms business.

Adjusted EBITDA rose 17% to 231 million euros, versus a company-provided analyst consensus of 210 million euros.

Performance at its power distribution business also aided profitability, the company said, helping to compensate for overall group sales growth of just 1.9% in the quarter.

The EBITDA margin rose to 8.3% from 7.2% in January-March last year.

($1 = 0.8903 euros)

Reporting by Giulio Piovaccari; Editing by Mark Potter

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