Computer glitch costs Royal Doulton £12m

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The Independent Online

Loss-making fine china manufacturer Royal Doulton today issued a profit warning after a new millennium bug-proof computer system hit major glitches.

Loss-making fine china manufacturer Royal Doulton today issued a profit warning after a new millennium bug-proof computer system hit major glitches.

The company, more than 200-years-old, said the problems had created delivery delays of about 10 weeks and a sales shortfall of up to £12 million.

On top of the lost sales, Stoke-on-Trent-based Royal Doulton was forced to spend a further £1 million on additional staff and shifts to restore the rate of deliveries.

The alert was badly received by the company's long-suffering investors, with shares falling by 17% in the minutes after the announcement.

Royal Doulton's classic tableware operations have been hard-hit by the decline of formal dining and the rise of TV dinners.

It was recently reported to be selling some of its porcelain treasures, including a rare figurine of Diana, Princess of Wales, to raise cash.

Chairman Hamish Grossart, called in by major shareholders to turn around the troubled company, said operating losses for the full year would be worse than City forecasts of £10 million.

He said of the IT problems: "In simple terms, the rate of deliveries that we were able to produce ran at about half their normal rate."

There were problems with the hardware capacity of the new system and some software "teething problems" he said.

But there were also "self-inflicted" mistakes in setting-up the group's warehouses.

As a further blow to shareholders, Royal Doulton said market conditions remained competitive.

Overall turnover for the year would depend on the "all important" Christmas trading period, it said.

Weekly deliveries had now returned to the levels seen before the new systems were introduced. Order backlogs were expected to return to previous levels before the end of the year.

Royal Doulton is in the middle of a widespread restructuring which has already cost 1,500 jobs.

The IT failure will come as a bitter blow to its plans, which it warned in August would take three to four years to produce reasonable returns for shareholders.

Mr Grossart said the profit warning would not affect that target.

It is believed the company is investigating whether it can obtain compensation from the system supplier, which remained unnamed. Royal Doulton was not insured for such business interruptions.

The company's shares have crashed from a year high of 142p to 75p at one stage. After today's announcement they fell 17p to 86p.

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