Opinion: In two weeks time the long-suffering shareholders of luxury tableware group Waterford Wedgwood will receive further grim financial news, plus a likely call for fresh funds.

But what they will want to know is whether there is any sign, however tenuous, of a recovery in sight? Or will it just continue hobbling along the well-worn path of losses, redundancies and financial props?

Certainly it is rapidly reaching the stage when the main shareholders, Sir Anthony O'Reilly, and his brother-in-law, Peter Goulandris, must seriously question their steadfast commitment to the group. They bailed it out last year when they underwrote the €100 million rights issue which led to their joint holding doubling to 51 per cent.

A new rights issue of €50 million would cost them at least €25.5 million but is likely to be well in excess of that in a personal underwriting.

Ironically, with 51 per cent already owned, the duo could make a bid of 7.5 cent per share. That would represent a 50 per cent premium on the present price, and with such widespread shareholder disillusionment - apart from the duo - it might appeal. And at that price it would cost them just €163 million for the outstanding shares!

Another share issue would represent its fourth in three years. In 2003 it raised €38.5 million, as part of a financial restructuring; in 2004 it raised €100 million to buy the outstanding shares in Royal Doulton which had a conventional underwriting, and in 2005 it raised a further €100 million. Another rights issue would need a "whitewash" waiver, which would remove the obligation of making a bid for the whole company if it is personally underwritten by Sir Anthony and Goulandris.

If it does indeed announce a rights issue of €50 million with its preliminary results, it will have raised a cool €288.5 million in this short time span. When compared with its market capitalisation of just €222 million this week, the cynic could validly ask: has it all been a waste?

However, not all is gloom. The preliminary results, expected this month, are likely to show a glimmer of hope.

At the halfway stage last December, new chief executive Peter Cameron said that the group was likely to be in the red for the second six months but that he expected some of the cost saving to show through in the last couple of months in the financial year to March 31st, 2006. The results are likely to back that up.

These preliminary figures, following the interims, will be under the new International Financial Reporting Standards (IFRS) accounting rules. While the previous figures may be adjusted, an analysis of the figures is unlikely to be straightforward as they will include a contribution from Royal Doulton which was wholly acquired, while the previous year will include a contribution from All-Clad, the US kitchenware company which was sold. However, overall the sales should be somewhat up on the previous year and, significantly, the operating loss will be a little lower, indicating that the cost effectiveness is starting to come through.

But the market for its products remains difficult. And the reduction in the value of the dollar of some 7 per cent since the start of the year has been a large negative. With the North American market accounting for 78 per cent of Waterford Crystal sales and 20 per cent of the ceramics division, the weakness of the dollar has a significant impact. And with little sign of the downward trend in the dollar changing, the US market will remain difficult.

Nevertheless, it is continuing with its new product drive. The link-up with the well-known Californian wine producer, Robert Mondavi, is expected to reap benefits. Also, according to market sources, Waterford Crystal is about to announce a link-up with a well-known US fashion designer, in a similar manner to the successful range of John Rocha glassware here. If these new products are taken up with the same ferocity as John Rocha's, it should eventually reap rich rewards in the large US market which at the moment is suffering from weak consumer demand.

Waterford, which includes the crystal side, the Marquis and Stuart ranges, and Christmas decorating, accounted for only 27 per cent of group sales in the first half of last year.

Sales are now dominated by ceramics, which include the Wedgwood, Rosenthal and Royal Doulton companies. New ranges have been launched: Home Designs at Rosenthal, Jasper Conran at Wedgwood and Gordon Ramsay at Royal Doulton.

Substantial cost-cutting benefits are also expected to flow from rationalisation within the ceramics division. The synergies following the takeover of Royal Doulton, for example, are projected at €40 million per annum. There is no doubt that Waterford Wedgwood is bursting with activity. And it appears to be pulling out all the stops, in a difficult trading environment, to knock itself into better shape. But it remains vulnerable financially.

The last accounts, for example, showed net debt of €312 million, but more significantly, a shareholder deficit loomed at €123.7 million. While the pension deficit of €293.2 million, now on its balance sheet, is largely responsible for this deficit, it still has little financial manoeuvrability, with the need for fresh funding always not far away.

The group has not changed its projection that it will go into profit by the end of the financial year to March 2007. So this year will be a crucial period.

As an extra incentive, the group last December launched a new share-option scheme for its senior management.

This included options over 104.4 million shares to Peter Cameron at six cent per share - this exercise would cost just €6.3 million - and other senior managers were granted options over 14.5 million shares at the same price. With the share price stuck at five cent - 50 per cent less than last year - there is little incentive at the moment.

But if it can announce a return to profits, and a new sustained upward trend, this time next year, the prospect for the shares will be positive.

Otherwise . . . ...