Waterford Wedgwood profits hit £26m

Waterford Wedgwood, the Irish china and glass company, reported a 40 per cent increase in first-half operating profits yesterday despite difficult markets and said it was optimistic about further growth.

Operating profits in the six months to 30 September jumped to €40.6m (£25.7m) from €28.8m. The company said the improvement, on a slight dip in sales, was achieved by a radical restructuring since last year, which included 1,100 job losses with another 300 to come. Operating margins rose 2.8 percentage points to 8.6 per cent and stock levels fell by €40m, with a commitment to further reductions.

Current trading is solid, the company said, with sales for September and October up 6 per cent on the same months last year.

Sir Anthony O'Reilly, Waterford Wedgwood's chairman, said: "We are optimistic that ongoing margin improvements, combined with the new energy we derive from fresh product introductions, new distribution and our recent acquisitions, will produce continued growth."

Waterford Wedgwood has moved to broaden its distribution, particularly in the United States, which accounts for half of group sales. It has expanded into speciality retailers such as Williams-Sonoma and value retailers such as JC Penney in order to reduce its reliance on department stores.

The acquisitions of two mail order groups, Cash's and Shannon, has given Waterford Wedgwood more than a million US addresses.

In the crystal division sales fell 6.4 per cent in a difficult market while market share in the key US market was maintained at 40 per cent. New product launches included a new range of wine glasses designed by John Rocha, which are aimed at younger customers.

In ceramics, the weak German market held the division back with a 7 per cent fall in overall sales. But growth is expected to come from a new range of Kelly Hoppen giftware and Vera Wang designs for the bridal market. In cookware sales jumped 37 per cent led by the All-Clad American range.

Group pre-tax profits almost quadrupled to €39m. Net debt fell by €55m to €402m, with interest cover of 4.5 times. "We're firing on all cylinders," the company said.

Sir Anthony is also chairman of Independent News & Media, publisher of The Independent and The Independent on Sunday.