Waterford profits rise by 24%

Waterford Wedgwood is targeting acquisitions in the #200-#300 million (£157£236 million) price range as part of its strategy to double turnover to more than #2 billion over the next five years, chief executive Mr Redmond O'Donoghue has said.

After the group reported sales exceeding #1 billion for the first time and a 24 per cent increase in pre-tax profits to #85.5 million, Mr O'Donoghue said acquisitions would be outside the existing core business of crystal and ceramics. "We would aim to branch out into other luxury goods categories like luggage, leather products, jewellery and watches," he stated, adding that any acquisition would need to have a US presence.

Mr O'Donoghue also stated he did not expect Waterford to be severely affected by a downturn in the US economy. "If there is a downturn, I don't think it will be sustained. America is the biggest consumer market and will remain so. To be big in the US is something everybody aspires to."

Last year was another bumper period for Waterford, with the group improving operating margins as operating profits rose 28 per cent to #110.3 million while sales were 23 per cent higher on #1.084 billion.

Sales of crystal were up 10 per cent on 1999 on #435.7 million with operating profits up 15 per cent on #65.8 million, driven by new products and extensions of existing product lines. The Wedgwood ceramics and china business - which has just emerged from a major restructuring - also put in a good performance with sales up 21 per cent to #481.4 million while operating profits were 25 per cent higher on #18.7 million.

The biggest growth came in Waterford's All-Clad cookware business and other products - gourmet foods, jewellery, linens and heirlooms - where sales almost doubled to #167.3 million and operating profits rose to #25.8 million from #14.1 million. Interest costs rose to #24.8 million from $17.4 million reflecting the cost of acquisitions, interest charges were covered 4.2 times by operating profits.

The results were slightly ahead of market forecasts, but the shares, which are tightly held, fell three cents to #1.36. But shareholders are getting a 15 per cent rise in their dividend and will get a final payout of 2.4 cents per share bringing the total to 3.06 cents.