Waterford Wedgwood Plans U.K. Closings
Jun. 04, 2003
DUBLIN, Ireland (AP) _ Waterford Wedgwood PLC returned to profit in the past fiscal year but said Wednesday it will close two tableware potteries employing more than 1,000 people in Britain and shift production of the cups and dishes made there to China where costs are lower.
The Waterford, Ireland-based maker of luxury crystal and ceramics said two potteries making Johnson Brothers tableware _ a brand with its roots in England since 1883 _ would close at a cost of 1,058 jobs.
Waterford Wedgwood's chief executive, Redmond O'Donoghue, said the firm ``could not continue to sustain the losses which were occurring at Johnson Brothers.''
The move of what is made at the potteries to China, it said, would allow the brand's cups and dishes to be produced at a quarter of the expense.
Overall, Waterford Wedgwood reported a profit of euro1.8 million ($2.12 million) for the year ended March 31 in contrast to a 1oss of euro52.6 million a year earlier.
It pegged the turnaround to its decision to begin slashing jobs and curtailing production in November 2001.
Investors viewed the numbers skeptically. In afternoon trading on the Dublin Stock Exchange, Waterford Wedgwood shares were trading at 22 euro cents (26 U.S. cents), less than a third of their value a year ago.
Since enjoying record sales and profits in 2000, Waterford Wedgwood has been hit hard by the economic downturn in North America and, in the past year, the surging value of the euro versus the U.S. dollar. The United States is the dominant market for Waterford Wedgwood products, particularly its flagship crystal.
``Given the ongoing global uncertainty, the group has continued to show resilience but is not immune from the impact. Our current focus is to maintain our strong market positions and improve operating efficiencies,'' company chairman Tony O'Reilly said in a statement.
O'Reilly, a newspaper baron and the former chairman of Heinz Corp., said the decision to move Johnson Brothers production to China would ``yield important benefits in the coming years.'' The brand accounts for just 8 percent of the group's sales of ceramics.
``A combination of a competitive cost base, innovative product strategy and improved capacity utilization will result in a swift upturn in profitability when demand grows again,'' O'Reilly said of the company overall.
The company said Wednesday that ceramics goods accounted for 43 percent of sales, crystal 33 percent, and cookware 13 percent. It said North America generated 51 percent of sales, including 64 percent of all crystal sold, while Europe bought 37 percent, and Asia and Australia a combined 11 percent.
Overall, however, sales in fiscal 2003 fell 4.6 percent to euro951.3 million ($1.12 billion) from euro997.6 million in 2002.
The Waterford crystal brand in recent years has sought to modernize its image by producing lines from contemporary designers, chiefly Dublin-based John Rocha.
At the 220-year-old crystal plant in Waterford, southeast Ireland, 1,500 unionized and highly paid workers have long resisted efforts to shift production to Eastern Europe.
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