In April, Prysmian experienced problems with the manufacture of the cables for the 2GW HVDC connection, which is aimed at transporting energy from Scotland's wind developments to England. It has since begun an investigation into the issues and their likely impact.
The company had said in its first quarter results that it did not expect costs to exceed revenues from the project, but it has now conceded that it will make a loss on the work.
In its half-year results, the company said that its adjusted earnings before interest, tax, depreciation and amortisation took a EUR 74 million hit related to the Western Link, coming in at EUR 204 million, down from EUR 282 million a year before.
Prysmian has not revealed the nature of the technical issues, but said that it has been "testing and optimising materials and processes" as a result of the faults.
When the company was awarded the EUR 800 million contract to supply and install the cables in 2012, it lauded the fact that this would be the first major project to use paper polypropylene laminate insulated cables.
The firm claimed that this would provide "enhanced electrical and thermal performance" allowing "higher voltage classes, reduced cables dimensions for equivalent transmission capacity and optimised power losses".
Prysmian reported a fall in sales to EUR 3.3 billion compared with EUR 3.5 billion in the first half of 2013. Without the negative impact of the Western Link project, organic growth would have been 3.4%, it said.
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