Luxury goods group Waterford Wedgwood has warned that its earnings, before interest, tax, depreciation and amortisation for the year to the end of March 2004 will be €12m less than expected at €68m.
The company said the shortfall was caused mainly by tighter margins and higher than expected pension costs at Rosenthal, its porcelain business based in Germany.
The group also announced that it has named a dedicated internal management team to work with business consultants Accenture to simplify working capital management and manufacturing processes. The commercial and accounting implications of the project will be assessed over the coming months, the company said in a statement.
Redmond O'Donoghue, Group Chief Executive Officer at Waterford Wedgwood, said the company looks forward to reducing its working capital requirements globally by lowering inventories and other steps. He said the project should free up cash in 2005 and 2006.
He said that sales in Waterford's final quarter were in line with company expectations. 'However in our Rosenthal business, we had to make some additional pension costs and to sacrifice margin in order to maintain volumes and market share in Germany where the retail environment remains challenging,' he added.
Waterford also said this morning that it has agreed a deal to sell All-Clad, its US based cookware subsidiary for $250m to French-based cookware and domestic appliance company Group SEB.
The deal is expected to be completed within 60 days, subject to approval by Waterford shareholders and by the Federal Trade Commission. The funds generated will be used to reduce debt, improve internal efficiencies and to support targeted marketing for the group's three master brands - Waterford, Wedgwood and Rosenthal and their related sub brands.
Waterford Wedgwood purchased All-Clad, based in Pennsylvania, for €110m in May 1999. Its sales in 1998 were €52m. It had sales of about €105m in the year to March 2004, while profits for the year were about €11m.
The group also announced that Peter Cameron, the Chief Executive Officer of All-Clad, is to remain with Waterford Wedgwood and will become the group's Chief Operating Officer.
Waterford Wedgwood is expected to announce it annual results for the year ending March 2004 on June 17.
Shares in Waterford Wedgwood closed down one at 18 cent in Dublin.
