Crystal group is silent on buy-out rumour

WATERFORD Wedgwood's results were pushed down the agenda yesterday fuelled by on-going speculation that the group might be taken private by its major shareholder, Tony O'Reilly.

Chief executive, Redmond O'Donoghue, added further to the speculation by refusing to comment either way.

While the group's shares rose six cent to 46c after the publication of the results they fell back to 44c by mid afternoon, and ended flat at the close. At that price they are just marginally above their five-year low of 33c.

By refusing to dismiss the market view that plans are afoot for a management buy-out, Mr O'Donoghue left the prospect on the table.

"We do not comment on market speculation, " he said

Niamh Brodie of Merrion Capital has no evidence one way or the other about such a move. But earlier this month she issued a note for investors raising that very prospect.

If it is to happen she said a share price of 60c would be appropriate, given the tough market conditions facing the group especially in the US.

Merrion's analysis said there was too much uncertainty surrounding the group's future to give the shares a buy recommendation, despite the obvious determination of the group in tackling its difficulties head on.

Waterford Wedgwood's interim figures produced results in line with market expectations boosted by cost cutting measures and a favourable exchange rate.

As a result group operating profits were up over 40% at €40.6m while margins were ahead by 2.8% to 8.6%.

During the period turnover fell from €493m to €471.2m, down by 4.6%.

Net debt was cut by €55m to €402m. Sales at the crystal division fell sharply over the six months from €178.7m to €158m, but profits were maintained at around the same level helped by discounted sales in some of its brands.

Ceramics were hit by the economic downturn with sales falling form €236m to €211m over the period.

By contrast cookware and other products were up significantly to €101m.

Looking ahead the markets believe the group has done all it can to take advantage of any upturn that comes its way. It will be helped also by the fact that its debt is being reduced with the prospects of further improvement on the cards.

Waterford's management is taking comfort from the fact that sales for September and October were up 6% on the previous year and the group has proposed an unchanged interim dividend of 0.7 cent.

Chairman Tony O'Reilly said he was cautiously optimistic about the key Christmas selling season.

"Our brands continue to perform strongly despite continuing difficult market conditions. We are encouraged that in September-October period our sales were up 10%," he said.

"We are optimistic that margin improvements, combined with the new energy we will derive from fresh product introductions, new distribution and our recent acquisitions, will produce continued growth," he said.