Waterford profits hit by price pressure
Luxury goods group Waterford Wedgwood today issued a profits warning after feeling the pressure from tough trading conditions in Germany.
The group – famous for brands such as Waterford crystal – was forced to cut prices at its Rosenthal porcelain arm amid a “challenging” retail environment.
Dublin-based Waterford told investors that earnings for the year to March 31 would be around €68m, some €12m less than expected.
The warning came as the group said it had sold its American cookware business All-Clad to the French owner of Tefal.
The company, which has more than 8,000 staff, is in the middle of an overhaul that has brought job cuts and the closure of factories in the UK.
Last November it announced a rights issue as part of a refinancing programme aimed at lowering debt levels.
Waterford chief executive Redmond O’Donoghue said that although sales in the final quarter were in line with expectations, tough trading as well as higher-than-expected pension costs had hit Rosenthal.
The group said the sale of All-Clad to Societe d’Emboutissage de Bourgogne (SEB) would transform its balance sheet and allow it to invest in Waterford Crystal, its Wedgwood china brand and Bavaria-based Rosenthal.
The American subsidiary was snapped up for $250m (€203.5m) - more than twice the amount it was bought for five years ago.
All-Clad – founded more than 30 years ago – was originally aimed at professional cooks but became a domestic brand during the 1980s.
It was bought by Waterford in 1999 and last year notched up profits after tax of around $11m (€9m) on sales of $105m (€85.5m).
Today’s deal will place All-Clad’s stainless steel pans and utensils in a portfolio that includes brands such as Tefal, Moulinex and Rowenta.
Paris-listed SEB makes some 70% of its sales outside France and last year posted turnover of €2.35bn.
Mr O’Donoghue added: “All-Clad was a marvellous investment for Waterford Wedgwood and it is time for our shareholders to derive the benefits of the very significant value that we have added to the brand.” Waterford will keep Spring, its European cookware brand.
