ISEQ values Waterford Wedgwood at €200m with borrowings of €372m

WATERFORD Wedgwood is valued on the ISEQ at less that €200m at this stage based on a share value of 4.5 cent.

By contrast, its borrowings are close to €372m, up on last year’s €299m, while prospects for the group this year are modest as it waits for its rationalisation programme to kick in.

The total cost of the programme, estimated at €90m by the group, is expected to yield similar levels of savings. Of that, about €70m is due to kick in this year while the group hopes to enjoy the full €90m cost benefit from next year.

On the back of the savings and some improvement at operating level the group expects to make a modest operating profit in the year to end March 2007.

In the meantime, it is shedding 2,200 from its workforce and closed its Dungarvan plant, which would have been unthinkable a few years ago.

Chief executive Peter Cameron who replaced Waterford-born Redmond O’Donoghue last year, said the group was “irremovably committed” to keeping its Kilbarry operation and stressed that it was sufficiently cost-efficient at this stage to justify its existence.

One of the new internal strategies is to keep plants “over-subscribed” according to Mr Cameron. In layman’s terms that means it has more orders than it can deliver and that helps significantly to sustain the operations in the group at greater efficiency levels.

In the meantime, the group has announced a wide range of new crystal and ceramic offerings linked to celebrity and designer names on both sides of the Atlantic. Traditionally the group has always had about a 25% shift in its product offering, but the latest products continue to exploit the more recent tradition of linking product to big names in design.

These include Robert Mondavi for a wine glass collection and Gordon Ramsay for a new ceramics line. These follow on the success of John Rocha and Vera Wang which continue to do well for the group. Also, the group has broadened its distribution channels to get products into furniture stores and wine shops.

Sales in the new lines will help offset falling revenues form core products which Davy Stockbrokers reckon are continuing to decline at the rate of 5% a year. The new ranges should offset those losses, they said.

NCB Stockbrokers John Sheehan of NCB Stockbrokers said sluggish retail spending in the US was hampering a recovery.

“We expect Waterford Wedgwood to suffer from weak consumer demand,” Mr Sheehan said. “Waterford Wedgwood’s financial position remains stretched in our view.”