Waterford outlines recovery plans

Luxury goods group Waterford Wedgwood today set out its plans for recovery after the weak US dollar and tough trading left it spiralling into the red.

The group, famous for brands such as Waterford Crystal, scrapped its dividend and admitted full year results were “not satisfactory” after a challenging year.

Waterford, which makes its products in Europe but sells many in the United States, has been severely hit by exchange rate fluctuations.

It was also affected by war in Iraq and SARS in the first six months of the last financial year.

The group issued a profit warning last month amid pressure at its Rosenthal porcelain arm in Germany and sold its US cookware business All-Clad to reduce heavy debts.

It posted pre-tax losses of €44.9m in the year to March 31, against profits of €7.2m last year.

Trading this month was “a little ahead” of last year and sales volumes in the first quarter were expected to be 2% ahead on last year at constant exchange rates.

Chief executive Redmond O’Donoghue said Waterford’s long-term success could not depend on exchange rates and other external factors and that it had to “chart” its own destiny.

“We are now positioning the group to be profitable, even at a weak euro-dollar exchange rate,” he said. “We cannot wait for the dollar to strengthen.”

The group said the sale of All-Clad was the first step in a “root-and-branch” review of the business, which will also include freeing up cash currently tied up in stock.

This will give the group more money to increase spending on marketing from the second half of the current financial year.

Although this would show through in the current financial year, results were expected to improve the following year.

The company has more than 8,000 staff.

Last November, it announced a rights issue as part of a refinancing programme aimed at lowering debt levels.

Today, it said benefits from this restructuring were not enough to overcome the impact of the weak dollar and lower sales volumes.

Sales for the year were €831.9m, down €119.4m on last year’s figure, although at constant exchange rates the gap narrowed to €28.8m.

Sales fell by 16.3% in the crystal division, although its brands maintained market share in Ireland, the US and the UK.

Ceramic sales were down 11.7% and cookware sales slumped 17.8%.