Waterford reports operating loss of €21.4m

Operating profits fell dramatically at troubled luxury goods group Waterford Wedgwood in the six months to the end of September.

Falling sales and the impact of a weaker dollar saw the group report an operating loss of €21.4 million compared to a profit of €4.2 million in the year-ago period.

The company reported a profit at the pre-tax level of €8.9 million but this was distorted by the €103.2 million exceptional gain arising from the sale of the group's All-Clad subsidiary.

Losses per share slumped to 4.71 cents from 79 cents a year earlier.

The figures were broadly in line with forecasts following a profit warning at the company's annual general meeting last month.

Chief executive Mr Redmond O'Donoghue said the first half of the group's fiscal year had been very difficult, "illuminated only by the sale of All-Clad for a very favourable price and by our negotiation of a new bank lending facility with more flexible terms".

"Although we benefited from reduced costs in the period, these reductions were not enough to shield us from the impact of lower sales revenues and the falling value of the dollar," he said.

The company has had a mixed start to the second half with October seeing a further 10 per cent slippage in sales on the same month in 2003 but November producing a better performance so far.

It plans to implement a 5 per cent rise in prices in the new year.

Sales declined in both the company's key divisions - crystal and ceramics. The crystal division saw a 10.8 per cent decline in sales to €120.8 million, largely on the back of weakness in the key US market.

On the ceramics side, sales fell 7 per cent to €158.4 million. While the figures were flat in the pivotal Japanese market, sales in Britain and the US softened.

Waterford is in talks with rival ceramics group Royal Doulton, in which it holds a 21.16 per cent stake, about a possible recommended offer for the group.

It intends calling an extraordinary general meeting before Christmas to progress a €100 million rights issue that would fund such a deal if it proceeds.

Mr O'Donoghue accepted that "these results are not good enough". He said the company was committed to implementing its recovery strategy as quickly as possible and had considerably strengthened its senior management team.

Former All-Clad chief executive Mr Peter Cameron has remained with the company as group chief operating officer and Mr Paul D'Alton has also joined Waterford Wedgwood as group chief financial officer.