Wedgwood continues to be a drag on Waterford Wedgwood, but not as much as previously. At least its profits seem to have stabilised and, after the major rationalisation programme, it is well equipped to benefit from any improvement in the Japanese market. That is more than can be said for some of Wedgwood's main competitors which are only now embarking on painful rationalisation paths.
"The economy in Japan is now showing signs of picking up momentum and we are looking to an expanding market in 2000," said chairman, Dr Tony O'Reilly. If this is translated into greater demand for Wedgwood's products in one of its biggest markets, the trend would be healthier in the second six months. That, in conjunction with a further boost from Waterford Crystal and a six-month contribution from All-Clad, the US cookware company which was acquired, should ensure strong profit growth in the next trading period.
Apart from the underlying growth from Waterford Crystal products, the group is bursting with optimism about the benefits expected to flow from the manufacture of a six-foot crystal ball which will be used as the prime symbol of the millennium New Year's Eve celebrations to be held in New York's Times Square.
"This momentous event, and the imaginative new crystal products created to celebrate it, are winning huge numbers of new customers for the Waterford brand; seed corn for new sales opportunities in the years ahead," according to Dr O'Reilly.
Benefit should also come from its designer labels such as the new Paul Costelloe range of ceramic tableware and giftware, the introduction of a new Jasper Conran designed range of crystal from Stuart (its British crystal subsidiary) and the lower-cost Benetton range, designed to introduce the Rosenthal brand to younger consumers. Overall, Waterford Wedgwood should have little difficulty in pushing earnings per share up from 6.6 cents in 1998 to about 7.9 cents in 1999. On this basis, the shares at 96 cents (76p), up two cents, are on a prospective price/earnings ratio of 12.2, an undemanding rating.
