September 12, 2018 / 12:34 PM / 3 months ago

Prysmian shares slide after it suspends work on UK project

Sept 12 (Reuters) - Shares in Italian cable maker Prysmian fell 5 percent on Wednesday after the company said it had suspended work on its giant Westernlink project in the UK to look into an issue on the onshore section of the cable.

The world’s biggest cable maker said the issue did not seem to be linked to a problem in the submarine section of the cable in June which was successfully repaired.

In June the company said it expected 50 million euros ($58 million) in extra costs due to problems related to WesternLink, prompting it to lower its 2018 adjusted core profit guidance.

It had previously booked provisions of 30 million euros on the contract.

Two sources said in June the 800-million-euro project also contained a penalty clause of up to 120 million euros for failing to meet contract conditions.

But one analyst, who asked not to be named, said on Wednesday while Prysmian was responsible for footing the bill for any repair work there was a cap of around 10 percent on potential damage to the client from issues like delays.

“There’s protection and it looks to me like the 5 percent drop in the share price is a bit overdone,” the analyst said, adding WesternLink was the only project in Prymian’s portfolio that had presented issues.

At 1138 GMT Prysmian shares were down 4.7 percent while the Italian blue-chip index was down 0.6 percent.

WesternLink is a high-voltage cable connection bringing solar energy from Scotland to England which ran into technical problems also in 2014. ($1 = 0.8629 euros) (Reporting by Stephen Jewkes and Silvia Recchimuzzi; Editing by Emelia Sithole-Matarise)

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