Waterford Wedgwood has recorded marginally lower-than-expected results, with a 7.5 per cent rise in pre-tax profit to £10.2 million in the first half of 1997. Adverse currency movements affected the results. Although the crystal side produced strong growth, the group had to contend with lower profits from Wedgwood, the fine bone china company, which was affected both by the strength of sterling and the weakness of the yen. But reflecting real growth, earnings per share rose by 11.1 per cent to 1.2p. And the interim dividend is being raised by 16.7 per cent to 0.35p net per share. The growth was achieved despite adverse currency movements which cut profits by £1.8 million, so the underlying trend is better than indicated by the figures. Wedgwood suffered most, with an adverse currency translation of £1.1 million while Waterford - despite the favourable translation against the dollar - had a £700,000 million hit. This arose on hedging.

Chairman, Dr Tony O'Reilly said the first half was characterised by the adverse exchange movements and continuing investment "to build our longer-term future". The results, he added "highlight the global reach of our business and the success of our strategy for further growth". Group turnover rose by 7.2 per cent from £163.2 million to £174.9 million. Operating margins improved from 7.0 per cent to 7.1 per cent. Waterford Crystal, helped by strong growth in the US, recorded a 14.3 per cent surge in worldwide sales to £70.3 million. Operating profits grew by 31 per cent from £5.1 million to £6.7 million. Operating margins improved from 8.3 per cent to 9.5 per cent. This improvement is attributed to manufacturing efficiencies at the Waterford factories and Waterford's outsourcing which now accounts for 30 per cent of sales. The Marquis range increased sales by 15 per cent. The Waterford company continued to launch new products and extended some of its brands. Some 75 new crystal products were launched. New products are becoming an important addition to sales and now account for 25 per cent of Waterford's turnover. New products launched included John Rocha at Waterford, Waterford Crystal Jewels, a collectible range of crystal miniatures, Waterford Holiday Heirlooms and a range of premium-priced Christmas ornaments. These have been well received, said Mr Redmond O'Donoghue, chief executive of Waterford. Stuart Crystal, which was purchased in 1995, recorded a profit of £368,000. This compared with a loss of £19,000. The results from Wedgwood were disappointing. Mr Brian Patterson, chief executive, Wedgwood, said the results were affected by the strength of sterling and weakness of the yen. A consumption tax introduced in Japan put the Japanese consumer into "his/her shell", he said. Wedgwood sales rose by a marginal 2.9 per cent from £101.7 million to £104.6 million while operating profits fell by 9.5 per cent from £6.3 million to £5.7 million. Dr O'Reilly noted that the Wedgwood brand remained strong, growing by 4 per cent as a result of new product launches and improved distribution. "Sales in Japan bucked the consumer trend, growing by 8 per cent and, in the UK, retail sales grew by 4 per cent, although in pan-Asia and in the duty free category, sales suffered."

In the lower-priced earthenware division, sales declined by 6 per cent even though new product introductions under the Johnson Brothers brand showed encouraging growth. Profits were flat at £5.1 million. Rosenthal, the German porcelain maker, in which the group has a 26.2 per cent stake, reduced its losses from DM10.7 million (£4 million) to DM7.8 million. With the use of equity accounting this does not affect the group. This investment is valued at DM36.4 million up from DM31.5 million when it was purchased. The group has an option to buy a further 13.5 per cent but this will not be implemented until an opportune time, said group finance director, Mr Richard Barnes. Further rationalisation, including redundancies, is expected at Rosenthal, and outsourcing is to be introduced. The group's net borrowings have risen from £56.9 million to £75.1 million pushing the gearing up from 37 per cent to 39 per cent. This comes down to 32 per cent if the Rosenthal investment is excluded.