Difficulties in Asian markets and higher interest costs have cut Waterford Wedgwood's pre-tax profit by 12 per cent from £10.2 million to £9 million in the six months to June 30th last.

The underlying trend, however, is upward; operating profit grew by 13.3 per cent to £14 million.

All the impetus to growth came from Waterford Crystal which recorded a substantial increase in profits. Rosenthal, the German porcelain manufacturer, now a group subsidiary, has broken even six months ahead of schedule but Wedgwood, the fine bone china and earthenware company, suffered a reversal due to its exposure to the Asian market and the strength of sterling.

"By any measure, the renaissance of this group has been a significant achievement," said chairman Dr Tony O'Reilly. "We continue to make progress towards the group sales target and our 15 per cent operating profit margin objective," he added, noting that the change in market conditions in Asia continued to be felt by all luxury branded goods companies and "has moderated our rate of growth for 1998".

Group sales grew by 47 per cent to £257.7 million, mainly due to the inclusion of Rosenthal - growth was 12 per cent excluding the German company. While group operating profit enjoyed reasonable growth, higher interest costs - due to financing costs on the acquisition of Rosenthal - reduced profits at the pre-tax stage. Earnings per share are unchanged at 1.2p but, excluding Rosenthal, there was an underlying increase before goodwill to 1.38p. The interim dividend is being raised by 20 per cent from 2p to 2.4p.

A breakdown of sales shows a 26 per cent rise from £70.3 million to £88.6 million by Waterford Crystal. More importantly, operating profit grew by 36 per cent from £6.7 million to £9.1 million, widening its profit margins by a percentage point to 10.3 per cent.

Dr O'Reilly remarked: "Waterford remains the engine of growth, providing the headroom to implement our group-wide strategy despite market volatility."

The profit rise has been attributed to product development, investment in brands and better productivity. Some 75 per cent of Waterford Crystal's sales are attributed to Waterford brands, 11 per cent to the cheaper Marquis range and 9 per cent to Stuart, the British crystal company. It launches new products at the rate of 1.5 per day, said Mr Redmond O'Donoghue, Waterford Crystal's chief executive. New products accounted for more than 20 per cent of first-half sales. The crystal company also had to expand its Waterford visitor centre to cope with increased demand. Mr O'Donoghue reckons some 300,000 visitors will pass through the centre this year, making it the fourth or fifth most popular tourist venue in the Republic. In the US, by far its most important market, sales were up by 16 per cent doubling market share. There was also sharp growth in other geographical areas; Ireland was up 20 per cent, Britain showed a 9 per cent gain while Canada was up by 15 per cent.

Although Wedgwood's sales rose from £104.6 million to £107.3 million, there was a 5.9 per cent decline in sterling terms. Operating profit fell from £5.4 million to £4.5 million. However there was an improved sales performance outside Japan and the Asia-Pacific region due to the introduction of new products. Following a rationalisation programme, Rosenthal moved into break-even. Sales rose by 3 per cent as it increased its presence in the US and Japan on the back of Wedgwood products.