DUBLIN, March 6, 2002 (PRIMEZONE) -- Waterford Wedgewood (Nasdaq:WATFZ) announced results for the year ended Dec. 31, 2001:
-- Sales again exceed Euro 1 billion despite difficult trading
conditions
-- Operating profit of Euro 67.3 million (2000: Euro 110.3 million)
-- Operating margin of 6.7%
-- Proposed final dividend of Euro 2.40c, equal to 2000 - Euro
3.10c for full year (2000: Euro 3.06c)
-- Restructuring initiatives (Euro 61.8 million charge) on track
with significant benefits accruing
-- First-time sales contribution from Ashling Corporation (luxury
linens) of Euro 25.4 million
-- Rosenthal global franchise with The Andy Warhol Foundation
Chairman's Statement:
In 2001, Waterford Wedgwood once again achieved over Euro 1 billion sales, just 6.7% below the record year in 2000 (when sales surged 23%), despite a most challenging economic environment. The second half slow-down offset the growth achieved in the first half. However, 2001 sales were 15% over 1999 levels and 13% over the average of the past three years.
The acquisition of Ashling Corporation (luxury linens) in July highlighted the Group's continuing commitment to new product categories. The Group also announced, at the end of last year, important restructuring initiatives which respond to changing market circumstances and address the impact of 11 September. These initiatives, already well underway, will yield substantial returns to shareholders.
The Group's portfolio of great brands stood the business in good stead in 2001 in challenging trading circumstances. We have taken forward-thinking and decisive action to address rapidly changing conditions so that the Group is well positioned in the global market for luxury lifestyle brands.
Financial Results and Strategic Review Update
The Group achieved sales of Euro 1012.0 million for the year ended 31 December 2001, a decrease of 6.7% over the prior year (2000: Euro 1084.4 million). At the time of the Group's announcement on 7 November, we highlighted the disproportionate impact of reduced trading on the profitability of the Group, as reflected in these results. Operating profit fell to Euro 67.3 million (2000: Euro 110.3 million) and pre-tax profit before goodwill, restructuring charge and write down of investment was Euro 41.3 million. Earnings per share, before goodwill, restructuring charge and investment write-down, fell to Euro 5.26c (2000: Euro 10.00c). Group operating margin was 6.7%.
On 7 November 2001, Waterford Wedgwood announced that, following a strategic review of its business, it would undertake a worldwide restructuring programme which would protect the Group's ongoing profitability. These initiatives are proceeding as planned. The Group projects the programme will result in incremental profits of Euro 43.0 million, on an ongoing full year basis, against a restructuring charge of Euro 61.8 million, which includes a cash outlay of Euro 31.0 million.
We are further lowering operating costs through the greater use of technology, through warehouse consolidation in the UK and by decentralising sales and administrative functions at Wedgwood.
Manufacturing capacity is being reduced by the closure of the crystal plant in Stourbridge, England. Further rationalisation is in progress at the Group's other crystal and ceramics plants in the UK, Ireland and Germany.
These capacity reductions are contributing to an aggressive inventory reduction programme which also includes short-time working at the Group's own factories, curtailed purchases from outsourced suppliers and the write-down of Millennium product inventory.
Refurbishment of the Group's own retail stores, which showcase Waterford Wedgwood's luxury lifestyle brands around the world, is on track. Following the success of the recently opened Cape Town and Taiwan stores, 15 new boutique-style shop-in-shops have been opened in Japan, bringing the total to 22. These modern outlets have already demonstrated significantly increased sales. 2002 will see the ongoing refurbishment of stores worldwide as well as the closure of those concession outlets that are under-performing. The Group is actively seeking premium locations in the UK and Europe in order to pursue its target of ten new stand-alone stores.
The Board has taken the decision to write down to the market value (Euro 2.0 million) the Group's investment in Royal Doulton plc. This investment was acquired in November 1999 for Euro 17.2 million. The Group announced on 4 March that it had acquired 4,704,268 shares (approximately 5.66%) in Royal Doulton. The Group today announced that it has acquired a further 500,000 shares. These shareholdings are further to Waterford Wedgwood's initial holding of 12,380,570 shares and bring the Group's total holding to 21.29% (17,584,838 shares). After the restructuring provision of Euro 61.8 million and investment write down, the loss for the year was Euro 45.2 million.
Net debt was Euro 364.1 million, Euro 31.3 million up on 2000, of which Euro 22.2 million is accounted for by exchange and acquisitions. Restructuring spend in 2001 was Euro 13.3 million. Underlying net debt is therefore slightly below 2000 levels. The Group continues to concentrate on tight cash control, lower capital expenditure and a determination to match capacity to demand, thus minimising inventory and reducing debt.
The Directors are proposing a final dividend of Euro 2.40c, equal to 2000, and making a total dividend for the year of Euro 3.10c (2000:Euro 3.06c)
Year to Year to
31 December 2001 31 December 2000
Euro million Euro million
Sales - total 1012.0 1084.4
- crystal 368.6 435.7
- ceramics 472.9 481.4
- cookware / other 170.5 167.3
Operating profit* 67.3 110.3
Pre-tax profit* 41.3 85.5
Earnings per share* 5.26c 10.00c
Dividend per share 3.10c 3.06c
* pre amortisation of goodwill, exceptional restructuring charge
and investment write down
For the entire text of this press release including the complete financial tables: http://reports.huginonline.com/851020/100512.pdf