Sparkling growth in profits at Waterford

Waterford Wedgwood has reported a 41 per cent rise in first-half operating profits despite difficult market conditions.

The crystal and china maker recorded a 4 per cent drop in sales to €471 million in the six months ended September but posted operating profits of €40.6 million, up from €28.8 million a year earlier.

It was helped by a restructuring programme, launched in November last year, which resulted in cost savings of €12 million in the first half.

The programme is designed to lower inventories, cut capacity, lower capital expenditure and reduce employee numbers by 1,400. Already, 1,100 jobs have been cut with the remainder to go in the coming months.

The company has also reduced its inventory sharply, cutting it by almost €40 million. The cost-cutting helped boost operating margins by 2.8 percentage points to 8.6 per cent over the period.

"We are optimistic that ongoing margin improvements, combined with the new energy we will derive from fresh product introductions, new distribution and our recent acquisitions, will produce continued growth," chairman Sir Anthony O'Reilly said.

However, the company was hit by tough economic conditions in its main markets in the first half.

Crystal sales were down by 6.4 per cent while sales of ceramic products fell by 7.4 per cent. Only cookware posted a rise, jumping by 37 per cent on foot of a strong performance from its All-Clad premium cookware brand in the US.

The company said it was encouraged by a 6 per cent rise in sales in the September-October period. But the company remains cautious heading into the critical holiday sales period.

"We are sitting on the edge of our seats," Mr O'Donoghue said.

Waterford Wedgwood has proposed an interim dividend of 0.7 cents, unchanged from last year.

It has also made progress on reducing its borrowings, cutting its net debt by €54.5 million to €402 million. This is seen falling towards €350 million by year-end.

The company reported an exceptional gain of €9.7 arising from the conversion of dollar loans and a profit of €5 million from the sale of surplus land in Waterford.

Its shares rose to 47 cents following the results but later closed unchanged at 40 cents per share.