Wedgwood static as Waterford crystal sales spur profits
A strong surge in crystal sales and profits boosted Waterford Wedgwood's profit before tax, exceptionals and goodwill, by 35 per cent, to €68.7 million (£54 million) in 1999 from €51 million in 1998. This growth was achieved despite a static performance from the ceramics' companies, Wedgwood and Rosenthal.
The results also benefited from a six-month contribution from All-Clad, the US cookware firm acquired last year. Excluding this, the underlying increase in group operating profit is 23 per cent. Chairman, Dr Tony O'Reilly noted the results represented the group's seventh consecutive year of sustained double-digit progress. "It clearly demonstrates that we have delivered on our strategy for profitable growth." Finance director, Mr Richard Barnes, described them as "outstanding".
Group earnings per share grew to 8.26 cents from 6.59 cents. Shareholders are to benefit with a final dividend of 2.1 cents, making a total of 2.67 cents, representing a 16.7 per cent increase on 1998.
Sales increased by 20.4 per cent to €879.6 million from €730.5 million. This growth was almost entirely attributed to crystal; ceramics only managed marginal growth.
Group crystal sales increased by 31.5 per cent to €395.2 million. More impressively, operating profit grew by 39 per cent to €57 million. The return on sales widened by 0.8 of a percentage point to 14.4 per cent, on a restated basis.
The group said sales continued to grow in all markets, but most notably in the US, which was up 37.7 per cent, and Ireland with a 25.9 per cent increase. This reflected new product development programmes and the success of its Millennium products. Sales in Britain were 17 per cent higher, in Australia, they were up 42 per cent and in Canada, the increase amounted to 39 per cent. However, there a was a contraction of 15 per cent in Japan.
Mr Redmond O'Donoghue, chief executive of Waterford Crystal, said there was a "huge emphasis" on new products, which accounted for 27 per cent of the sales.
He said the Times Square Millennium Ball in New York, seen by millions of people worldwide, was a great success. He also noted that Waterford jewellery had been introduced successfully. The Waterford visitor centre encountered a 24 per cent rise in sales to the 315,000 visitors.
Sales of ceramics increased by 3.8 per cent to €396.8 million, while operating profits grew by just 1.4 per cent to €15 million. Wedgwood brand sales were up by 5.4 per cent but Rosenthal sales were flat because of the German economy. The return on sales was only 3.8 per cent which is a "far cry" from the target of 15 per cent, said Mr Brian Paterson, chief executive Wedgwood. "There is still a lot of work to do."
The breakdown of sales showed a 4 per cent increase in Britain and Ireland. In continental Europe, the growth was 2 per cent; in the US it was 16 per cent. There was a "lot of momentum" in that market and Mr Paterson said the group was now the number two player in the US market compared with fifth a number of years ago. There was a contraction of 3 per cent in Japan.
All-Clad made a half-year contribution of €36.7 million in sales and €6.5 million in operating profit. It had to spend €5 million in capital expenditure to break bottlenecks.
The group also announced the appointment of Lord Wedgwood, a direct descendant of Josiah Wedgwood, the founder of Wedgwood, as an executive director.