Waterford profit warning may lead to job cuts
Fine crystal and china maker Waterford Wedgwood today said it may have to cut jobs after warning on profits following disappointing New Year sales.
Chief executive Redmond O’Donoghue said the company needed to cut costs in its operations in Ireland and Germany, which may mean reducing staff numbers.
Waterford said sales in January and February were 11% down on the same period last year, despite having risen in November and December by 3% and 2% respectively. The company forecasted a 6% decline in sales for the 2004 tax year.
Mr O’Donoghue said the group’s board was reviewing measures to return the company to sustainable profitability at current sales and exchange rate levels.
“Weak demand in January, February and the beginning of March, combined with an accelerated inventory reduction programme, will substantially impact our financial results,” he said.
“We plan to continue to address our fixed costs base while investing in new, classic and contemporary product streams and other focused marketing programmes.”
He added that the company needed to introduce more contemporary designs to attract more younger consumers, citing Irish designer John Rocha’s minimalist Waterford crystal line, a Wedgwood china collection by Britain’s Jasper Conran and a package of new china, crystal and giftware for the US by Vera Wang.
“Certainly the market is changing and we have to change with it,” he said.
The weakening US dollar has hit Waterford Wedgwood hard in recent years.
North America accounts for much of its business, including about half its sales of Waterford crystal.
It reported operating losses of €21.4m for the six months to September 30, against profits of €4.2m in 2003.
As part of an overhaul, it has cut costs, substantially reduced inventory levels and announced price rises.
Last week, the firm, which bought china maker Royal Doulton earlier this year, said finance chief Paul d’Alton had left to become finance director of greenhouse gas reduction company AgCert International.
It is hoped the Doulton acquisition will boost the competitiveness of both companies in a toughening market.
The group expects to publish results for the year to March 31 on June 16.
