WATERFORD Wedgwood aims to double sales by the end of the century. Growth in existing businesses and by acquisition will be the means of achieving the target - "the Chairman's Challenge".
Describing the targets as "ambitious", group chairman Dr Tony O'Reilly said they were "designed to challenge the very best in management skills".
After some tough years when management concentrated on survival and restructuring, the group has now "shifted gear" to go for growth.
Underlying this target is a reassessment of the role of the group. Waterford Wedgwood has been a glassware and ceramics group with strong brand names. It will become a giftware group with strong brand names.
As Waterford Crystal chief executive Mr Redmond O'Donoghue explained: "The total premium crystal market in the US is $325 million (£206.8 million). Even if we got all of it, it is limiting. If we see ourselves in the giftware market - a $7.5 billion market - only a small proportion would make us very significant."
Extension of the existing business will be focused on adding new core products and increasing operating efficiency. Distribution will be improved and existing channels expanded by adding direct sales and other methods.
Investment will be made - £20 million this year - to improve processes.
The brand will be extended - "carefully", group management stressed - into new non-core products, possibly including fragrances and leather products. The group will sell into new geographical markets including India and south America.
On the production side, outsourcing - where production is carried out under contract by a third party - is expected to increase at Wedgwood. Currently about 5 per cent of Wedgwood sales involves ceramics produced by other companies. This is expected to rise to about 10 per cent as the company looks for the lowest-cost production.
At Waterford Crystal, the level of outsourced production is expected to stabilise at the end-1995 level of 23 per cent of sales.
It made sense to use the Waterford plant, where possible, because of the fixed overheads costs already there, Mr O'Donoghue said. The strategy was to use "multiple competing sources" of production.
At 12.6 per cent, operating margins in the crystal company are closer to the group target of 15 per cent.
At Wedgwood, the 8 per cent margin is still well off that 15 per cent target but going in right direction.
Acquisitions will contribute to achieving growth targets. The group expects a major refocusing in the ceramics market and expects to "pick off the right company at the right time". It is well positioned to do so with low gearing and a strong cash flow.
