New chief executive to continue push into non crystal products
DEVELOPING non crystal products under the Waterford brand name is one of the aims of Mr Redmond O'Donoghue, who becomes chief executive of Waterford Crystal at the end of February.
The first Waterford born chief executive of the company takes over from Dr Paddy Galvin, who is retiring. Stating that he was "thrilled and proud" at his appointment, Mr O'Donoghue said he believed "passionately" in brands "and particularly in the wonderful Waterford brand".
Mr O'Donoghue (52) will continue a strategy introduced by Dr Galvin - extending the Waterford brand to non crystal products. Within two months, the company will introduce linen carrying the Waterford brand name in the US market. The linen will be produced in the Philippines, China and Belgium.
"We are looking for new opportunities beyond our core business. We will take our brand outside crystal. But this must be one carefully. It must be brand enhancing, not brand diminishing," he said.
There will be three main elements to Mr O'Donoghue's management strategy - expanding the existing core business, improving margins and developing new business opportunities, including using the brand name to sell quality non crystal products.
"We have to draw a line in the sand. We have to stop looking back and start looking forward," he said, referring to previous problems at the crystal company. At their height, the division reported a loss of £21.3 million one year, reflecting high operating costs, unfavourable exchange, rates and additional provisions relating to stocks and debtors in the US.
There is scope for growth in crystal sales in existing markets such as the US, Britain, Japan and Australia as well scope for sales in new markets such as Thailand, Taiwan and South Korea, he said. But the major concentration will be on expanding in existing markets because, he warned, "it takes years to build substantial sales in new markets".
Asked about his plans to improve margins, Mr O'Donoghue said: "We can never say our cost base is fixed; we must always be more clever and more competitive." Margins could be improved by constant attention to operational efficiencies.
Mr O'Donoghue said he felt it was good that "a highly branded company" like Waterford had appointed as chief executive "someone who has come up the marketing road". The challenge facing him was to find ways to expand the business and "to see where we can take it".
His aim was to produce "real rewards for the people who invested in the company in 1990 when we were in trouble. They deserve it".
In 1990, Fitzwilton, US merchant bank Morgan Stanley and an investment group headed by Dr Tony O'Reilly invested £80 million for a 29.9 per cent stake in Waterford Wedgwood - the holding company for Waterford Crystal and Wedgwood - as part of a financial restructuring.
At that time Morgan Stanley took a 14.95 per cent stake as part of a five year investment plan.
The US bank has been reducing its stake which has been taken up by Fitzwilton and Dr O'Reilly his wife Mrs Chryss O'Reilly and her brother, Mr Peter Goulandris. Dr O'Reilly is chairman of the group.
Since the 1990 restructuring the group has steadily recovered from heavy losses. In the year to the end of March 1995 profits doubled to £22.6 million and the group paid a dividend for the first time since 1988.
Mr O'Donoghue joined Waterford Crystal as sales and marketing director in 1985 and was appointed to the board of Waterford Wedgwood. He came from Ford where he had spent 17 years working in Cork, Bristol and Madrid, where he was marketing director for Spain.
In 1990, at the height of Waterford's problems, Mr O'Donoghue was sent to the US to restructure the company's retail business. He spent just under a year in the US, which now accounts for about 70 per cent of sales. Mr O'Donoghue said that US sales are likely to continue to account for about 70 per cent of company turnover. But he added "it will be a 70 per cent slice of a bigger cake".
In June 1995, he was appointed chief operating officer of Waterford Crystal. He is not planning any changes in the management team. "I see myself as the conductor of an orchestra, a terrific orchestra. We have a very good management team, superbly professional, the best in business.
With the crystal company restructured, the focus will now be on the Wedgwood china operation.