Waterford Wedgwood shrugs off Asian woes to boost profit

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The Independent Online
WATERFORD WEDGWOOD, the fine china and crystal group, yesterday shrugged off the woes being experienced by the luxury goods sector with a 13 per cent rise in first-half operating profits to Irpounds 14m. The Waterford brand's performance was particularly strong.

The company said the Asian economic crisis had affected sales of Wedgwood china in Japan but the impact had been limited to pounds 1m. Waterford crystal, less exposed to Asian markets, saw profits rise by 36 per cent to Irpounds 9.1m, helped by the introduction of new products, including a millennium collection. Waterford's US sales rose by 16 per cent on the year.

The company said it was examining American sales closely to see if the recent turmoil in financial markets was affecting demand. Richard Barnes, the finance director said: "We have seen zero indication of any kind of slowdown. We see no signs of any changes in the near term but we are monitoring the situation closely."

Rosenthal, the German ceramics firm acquired by Waterford in February, is performing ahead of expectations: it broke even compared to an Irpounds 2.1m loss in the equivalent period last year.

Rosenthal was boosted by sales of its Versace designer collection and rationalisation of its distribution network in France and Italy. The company has also signed a deal with Bulgari, the luxury goods group, which will see Rosenthal ranges distributed in Bulgari's retail outlets.

Pre-tax profits fell by 12 per cent to Irpounds 9m partly due to costs associated with the Rosenthal deal. However, Waterford Wedgwood shares, which have fallen in recent months in line with other luxury goods stocks, rose by 2p to close at 52p.

"By any measure, the renaissance of this group has been a significant achievement," said Dr Tony O'Reilly, the group's chairman. "We continue to make progress towards the group sales target and our 15 per cent operating margin."

The company had hoped to achieve the margin target and group sales of Irpounds 650m by 2000. However, difficult markets in Asia may mean a slight delay in achieving the figure, the company said. "We believe the Asian situation will moderate growth in 1998 but, looking forward, rationalisation will help contain the situation,'' said the finance director, Richard Barnes.

Group sales rose by 47 per cent to Irpounds 257.7m in the first half. The proposed interim dividend is 0.4p a share, up 14 per cent.