Troubled crystal and ceramics maker Waterford Wedgwood issued another profit warning yesterday and said it would lay off 311 workers in Germany in a move to cut its cost base. Ciarán Hancock, Business Affairs Correspondent, reports.
In an interim management statement released to the stock market, Waterford Wedgwood said its sales for the year to the end of March would be €700 million, 4 per cent lower than the previous year.
It added that its earnings before interest, tax, depreciation and amortisation (EBITDA) - and before exceptional items are included - would be "negative and lower than broker expectations".
Analysts had pencilled in sales of €710-720 million and EBITDA of €12-14 million.
Stockbroker NCB said its pretax, pre-exceptional loss for the year was likely to be about €100 million.
Waterford Wedgwood said its ability to manufacture, source and distribute product in the run-up to the busy Christmas period had been hampered by a delay in the receipt of €57 million in additional funding from investment bank Lazard and its two largest shareholders, Sir Anthony O'Reilly and his brother-in-law Peter Goulandris.
The slowdown in the US and other major economies and the weak dollar also impacted revenues.
It said sales between October 1st and December 31st were 3 per cent lower that the previous year at €211.2 million.
Waterford Wedgwood said it would take a €12.5 million provision for costs related to the job cuts at its Rosenthal ceramics division in Germany.
This involves the redistribution of production between two factories there, increased automation and the outsourcing of certain labour-intensive products.
Waterford Wedgwood said it expected to achieve annual cost savings of €12.8 million a year from the restructuring.
The company, which employs 7,900 staff worldwide, is currently in talks with unions in Ireland to cut 490 jobs in Waterford.
At the end of last week, it laid off 70 temporary workers in Waterford as the first step in that programme. The workers were not entitled to redundancy payments.
Anthony Jones, Waterford Wedgwood's chief financial officer, said a "very, very rigorous budget review process" was currently under way at the company.
"There is clearly more that can be done," he said. "We're looking at our distribution channels and at where we are losing money . . . we are going to have to make some tough decisions."
In a note to clients, John Sheehan, an analyst with NCB, maintained his "hold" recommendation on the group.
"They've been making the right moves in terms of reducing manufacturing costs but the [ luxury goods] category is under a lot of pressure," Mr Sheehan added.
