Waterford Wedgwood is getting the thumbs up from Merrion Capital, which recommends investors to buy the shares at €1.07. The company has underperformed the quoted luxury goods sector since the Asian crisis due to continuing concerns over the profitability of the ceramics division and, more recently, the possibility of a post-millennium fall-off in crystal sales.
Merrion says the crystal side of the business, which accounts for more than 60 per cent of group profits, is in good shape. It is achieving underlying growth of the order of 12 to 15 per cent per annum which should ensure that crystal profits will still grow by around 5 per cent in 2000 and 2001.
The poor performance of the ceramics division has defected attention from the crystal and other businesses and has dragged down the group's valuation. Merrion believes a recovery in the ceramics division will have the double benefit of improving base line profits and expanding the rating of the group.
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