Waterford Wedgwood hopes for recovery later this year

Luxury products group Waterford Wedgwood has warned of continued difficult trading conditions in the first half of 2002, but has signalled an improvement later in the year.

Asked whether he was optimistic or pessimistic about the prospects for the US economy, chief executive Mr Redmond O'Donoghue professed to be part of the "glass half-full" school. Mr O'Donoghue would not elaborate but sources close to the group have indicated that incoming orders last week were the best for a long time.

But with profits down sharply last year, Waterford shares took a hammering on the Dublin market, even though profits and earnings figures were broadly in line with forecasts. Hit hard by the events of September 11th - particularly the crystal division - sales fell from €1.08 billion to €1.01 billion while pre-tax profits more than halved to €41.3 million. But the $61 million (€69.6 million) charge against a 1,400 job restructuring, a €15 million write-off against its investment in Royal Doulton, a goodwill write-off of €6.6 million and €1.5 million in tax meant that there was an after-tax loss of €43.3 million compared with after-tax profits of €79.6 million in 2000.

Mr O'Donoghue refused to comment on the group's renewed buying of Royal Doulton shares ahead of an extraordinary general meeting of the British group tomorrow to approve a crucial rights issue and restructuring plan.

Waterford bought another 500,000 Royal Doulton shares in the market yesterday to take its stake to 21.16 per cent. Informed sources believe Waterford is attempting to block the three-for-one rights issue which would dilute its stake in Royal Doulton unless it takes up its rights. All Mr O'Donoghue said was: "We bought into Royal Doulton in the first place to get a seat at the table, now we have a bigger seat at the table."

Within the crystal division, sales fell 15 per cent to €368.6 million but, when the exceptional sales of Millennium products in 2000 are taken into account, the underlying fall in sales is 3 per cent. Ceramics sales were broadly unchanged at €473 million with a first full-year contribution from German group Hutschenreuther offsetting lower sales in the other ceramic operations.

Sales in the cookware division totalled €170.5 million with a first-time contribution from the Ashling linens business cancelling out a 14 per cent fall in sales at the All-Clad cookware operation.

Mr O'Donoghue said the five-year target to double sales from the 2000 level of €1 billion remained.