Wedgwood warns on profits

INVESTORS in Waterford Wedgwood are braced for another set of disappointing results this year after the company delivered a fresh profits warning to the City today.

The pottery and glassware business, which took over arch-rival Royal Doulton earlier this year, said it expects total sales for the year to the end of March to be about 6% down on a year ago on a like-for-like basis. Profit margins are also lower thanks to a general global weakness in the tableware business.

Factory closures and job losses are expected following the announcement. The company said it was reviewing what steps to take to return the company to sustainable profitability but there was no immediate word on what these might be.

Half-year results in November showed a 5% drop and the picture since then has worsened. October saw a substantial drop of 10% and January and February have also disappointed, a spokesman told This is Money.

'There is no particular localised weakness. The US, which accounts for just under half our turnover since the Royal Doulton takeover, has been no better or worse than any other area,' he said.

At the half-year the company blamed poor performance in the US for part of the downturn though chief executive Redmond O'Donoghue said there had been signs of a pick up.

There was good news for shareholders in the shape of a positive update from Royal Doulton, which is being integrated following its recent takeover. O'Donoghue said the majority of the financial benefits from cost savings in the wake of the tie-up will start to come through towards the second half of the year.

The group made an operating loss of €21.4m (£15m) in the six months to 30 September against a €4.2m profit a year earlier. But thanks mainly to the $250m sale of its US cookware division All-Clad, it scraped a pre-tax profit of €8.9m. Full-year results are likely to be announced in mid June.