Waterford Wedgwood, the troubled luxury goods maker, said it had significantly reduced its losses in the first half of the year and as a result was on course to produce positive full-year earnings.

Addressing shareholders at its annual general meeting, the company also announced provisional plans to redevelop part of its Kilbarry site in Waterford.

"The group's operating loss was reduced substantially and we have seen a steady improvement in margins," said Peter Cameron, the group's chief executive. "Costs were lower and the sales decline of recent years was arrested for the first time since 2001 so that sales were in line with the same period last year."

The company is still on course to report a pretax loss as it has done for the past five years.

Mr Cameron said last month was the group's best September for three years and that he remains optimistic the improvement will continue in October. The company's shares rose 19 per cent, to close at five cent.

Waterford Wedgwood has undergone an extensive restructuring programme, including factory closures and the loss of more than 2,000 jobs, with the aim of saving €90 million a year. This year it is set to save €70 million.

Sir Anthony O'Reilly, the group's chairman, said the company had signed a memorandum of understanding with Ballymore Properties, with a view to redeveloping a portion of its main Waterford Crystal site at Kilbarry. He declined to give any further information about the 36-acre site, saying the talks were at an early stage.

Waterford Crystal will, however, continue to be produced on the site and no additional jobs will be lost, he said.

Shifting ceramic production to Indonesia has also made a significant difference, according to Sir Anthony.