Waterford Wedgwood chief executive Mr Redmond O'Donoghue said yesterday that the current business environment was the worst he had experienced in 35 years. Speaking after the group announced a €60 million (£47.25 million) rationalisation which will see 1,400 jobs - including 100 in Ireland - disappear, Mr O'Donoghue said: "The situation, in my experience, is unprecedented. We are prisoners of the market and I hope the market won't get any worse but I can't be sure. Terrorism is a very worrying thing. If there was an attack on the Sears Tower or the Golden Gate Bridge, the impact would be very dramatic," he said.

Asked whether yesterday's rationalisation would mean no further cutbacks, he said: "It would be dishonest of me to say that's it. I don't know." He said his experience from previous cutbacks at Waterford in the 1990s was that it was better to take the hard decisions early rather than late.

Some 100 jobs may be going in Waterford and Dungarvan out of a total of 1,650 but the Irish crystal operations, which account for about 16 per cent of the worldwide workforce, have emerged relatively unscathed from the rationalisation. The bulk of the job cuts are being borne in Britain, with the closure of the Stourbridge plant and the loss of 500 jobs.

Mr O'Donoghue rejected suggestions that the Irish crystal operations had been favoured over those in Britain and said if Stourbridge had been kept open, it would have required an investment of "millions" next year. The Irish operations had also been sheltered to a degree by the ending of a number of outsourcing contracts with crystal manufacturers in Europe.

As well as the 100 jobs going in Ireland and the 500 in Stourbridge, 500 jobs are to go at Wedgwood in Britain, 125 in Germany and about 40 in the US, Australia and Japan. In Britain, five warehouses will be consolidated into one location.

Of the €60 million rationalisation costs - which will be taken in full into the 2001 profit and loss account - €31 million is in respect of the closures and cutbacks while €29 million represents inventory write-offs, including the unsold Millennium products. "Thirty-one million euros in cash will buy us €43 million in savings in a full year," said finance director Mr Richard Barnes.

"The full impact will not be felt until 2003 but the rationalisation will result in a substantial improvement next year," he added, but it will also include a major refurbishment and rationalisation of the group's retail stores. Sixty-five underperforming concession stores will be closed and replaced by 10 upgraded standalone stores in premium locations. There will also be a major US marketing investment aimed at promoting Waterford products as gifts.

Mr O'Donoghue rejected suggestions that the group had used the events of September 11th "to go through the company with a knife". "The world market was weaker before September 11th, but those events have had a seismic effect on business," he said. Sales in September were down 15 per cent on the same period last year, while in the year to the end of October, sales were down 4.5 per cent year-on-year. While the outlook in November and December - part of the key selling period for Waterford Wedgwood - has improved, analysts believe the downturn will have a severe impact on Waterford's 2001 results.

Davy analyst Mr Joe Burnell has cut his forecast for operating profits to €70 million from €110 million, with the pre-tax profits forecast before the exceptional charge being cut from €79.6 million to €36 million. Mr Burnell has also reduced his forecast for total sales from €1.07 billion to €1.01 billion. The exceptional charge will result in a pre-tax loss of €24 million, he added.

Merrion analyst Ms Niamh Brodie was in broad agreement, forecasting a pre-tax loss of €23 million followed by a recovery to €57 million profit next year. She added that Waterford's coupling of a major investment in marketing with the rationalisation was well received. "It isn't just a slash and burn and that's a good sign," she said. The shares fell as low as €0.58 immediately after the restructuring announcement, but recovered in later trading to close five cents lower on €0.64.

Waterford Wedgwood is 26 per cent-owned by Sir Anthony O'Reilly and the Goulandris family.