EU green light for tax changes to give Waterford Wedgwood €15m boost

LUXURY goods group Waterford Wedgwood is set to land a €15 million windfall after last week’s decision by the European Commission to give the go-ahead to Irish tax changes introduced in last December’s Budget.

The company had faced a Capital Gains Tax (CGT) bill of €15 million arising from the €205 million sale of its All-Clad cookware subsidiary in the United States earlier this year.

However, the thumbs-up from Brussels for plans to bring in a CGT exemption for Irish companies that sell subsidiaries means the crystal and ceramics manufacturer is likely to keep the money.

A Waterford spokesperson said the company would study the terms of the EC decision before commenting. The Department of Finance said last week that it would move to enshrine the new CGT regime in Irish law with effect from last February, when the Finance Bill that set out the budget change was first published.

The €15 million will be a significant boost to the company, which has been under sustained pressure in recent years from a collapse in the dollar against the euro.

Sales in dollars account for almost half of Waterford revenues. The group also suffered from a fall-off in tourist numbers in the wake of the SARS virus and conflict in Iraq.

Waterford reported pre-tax losses of €45 million for the year to March, with adverse currency movements knocking €30 million off the bottom line. Chief executive Redmond O’Donoghue said at the time that the group could not allow its future to be dictated by exchange rates or other factors outside its control.

Waterford will use €190 million from the All-Clad sale to pay down its debt, which stood at €383 million at year end. The smaller debt pile will cut approximately €10 million off annual interest payments.

But the company still wants workers to agree to short-time working in an effort to cut wage bills. It needs to cut back on production until the company’s €320 million stock can be converted into cash.