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Waterford Wedgwood announces record annual earnings

Irish glass and china manufacturer Waterford Wedgwood Plc announced record annual earnings recently, boosted by a major restructuring and new product lines, and forecast a strong year ahead.
Waterfor…

Irish glass and china manufacturer Waterford Wedgwood Plc announced record annual earnings recently, boosted by a major restructuring and new product lines, and forecast a strong year ahead. Waterford, which saw pre-tax profit rise 35% to Euros 68.7 million (US$ 65.99 million) in 1999 on a 20.4% rise in sales to 879.6 million, said the current year had started well with sales up more than 20% in the first two months. “A still buoyant US economy, improving Asian and UK economies, and the steadying of the German economy, all point to a more favourable economic climate for 2000,” the company said in its results statement. Group Finance Director Richard Barnes said he believed the company was on a better footing and all restructuring, which included the closure of six ceramics factories and large-scale redundancies, was completed. Asked whether the group could sustain the sales growth seen in the first two months, Barnes said, “Double digit growth is entirely achievable.” He gave no specific forecast. Detailing group turnover, Waterford said crystal sales rose by 31.5% last year to Euros 395.2 million, with turnover up in all markets except Japan. US crystal sales rose 37%, with the company“s profile boosted by its crystal globe used in New York“s Times Square to mark the start of the new millennium. But the performance at the ceramics division was less glittering, with overall sales up 3.8% at Euros 396.8 million and operating profits up 1.4% in a tough international environment. The return on ceramics sales totalled 3.8% last year, with a mixed geographical performance. UK/Ireland sales were up 4% but Germany dropped 1%. The US proved strong, with sales up 16%. In Japan, sales dropped 3%, but officials said they were encouraged, given the weakness of that market. Waterford shares were unchanged in London but slipped 2.73% to Euros 1.0. Traders said the stock had run into some profit-taking in Dublin in low volumes. Analysts said the figures were broadly in line with expectations. “The crystal side is making all the running, although ceramics was flat, which is pretty much what we“d thought,” Richard Watson, analyst at Goodbody Stockbrokers, said. Watson, who recommends the stock as a “buy”, said Waterford had done a good job with its restructuring compared to rivals, such as Britain“s Royal Doulton Plc. “They are a long way ahead of the game. All they need to do now is get the volume of sales up a bit. I“ll be tweaking my forecasts up a little bit, the strength of the dollar isn“t fully reflected in these figures yet,” he said. The group“s remaining operations, including newly-acquired US cookware maker All-Clad, saw sales rise to Euros 87.6 million, up 83%. All-Clad, bought in June, accounted for Euros 36.7 million and 6.5 million of operating profit. Asked about the group“s stance on British china maker Royal Doulton, in which Waterford holds 14.9%, Barnes said the companies were “not at each other“s throats”. “We took the stake for two reasons – we thought it would be a sound investment and secondly, we were very aware they are a large player and we wanted to be in a position where we knew what was going to happen and maybe able to influence it. “We will not make a bid for them unless somebody else does something we don“t like,” Barnes said. If a bid for Doulton came from a third party, Waterford might review its position, he added.

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