Waterford Wedgwood is to make 560 people redundant in a £27 million rationalisation programme at its British fine bone china and earthenware subsidiary, Wedgwood.
Announcing the programme, in tandem with the confirmation that it had gained a controlling 51.58 per cent interest in Rosenthal, the publicly quoted German porcelain manufacturer, the group said cost savings and profit improvements of £44 million will be realised over the next three years, with £14 million coming through in 1998. The redundancies will involve 60 people at Mason's Ironstone plant which is to close and production will be transferred to Wedgwood's two other earthenware plants in Britain, 300 other hourly paid workers across other plants in Britain, and 200 people in other operations worldwide. Employment at Wedgwood will be reduced by around one-tenth in 1998 from its present level of 5,500. The majority are expected to be voluntary redundancies. The programme involves the rationalisation of European distribution and the "selective combination of backroom activities, the consolidation of Wedgwood's earthenware subsidiary from three into two manufacturing facilities, supply chain improvements, manufacturing efficiency improvements and supporting organisational changes in the ceramics businesses", according to Mr Richard Barnes, group finance director. The £27 million provision and Rosenthal's results will be reflected in the 1997 accounts. There is also to be further rationalisation at Rosenthal but these had been previously announced. The German company has already closed the plants at Selb and Waldershof, it will close the Kronach plant by the middle of next year and it has sold the loss making crystal company, Amberg, and the Media shop fitting business. Employment numbers have been reduced by 250 and a further 350 are scheduled for redundancy. This will bring employment levels down to 1,600.
The rationalisations, said Mr Barnes, will enable Rosenthal and Wedgwood to attain the group's target of achieving a 15 per cent return on sales. The "prime objective" is to "deliver the targets" and this includes pushing sales up from £530 million now to £650 million by 2001.
Waterford had a 32 per cent stake in Rosenthal and options over a further 13.5 per cent. It made the public tender offer of DM200 per share on December 8th, and purchased shares in the market, at prices up to DM200 per share which brought the stake over 51 per cent. Mr Barnes said he expected the stake to rise to around 75 per cent with the employees continuing to hold their 6 per cent holding because of the tax advantages in Germany. At that stage the Rosenthal share quotation in Frankfurt would be retained.
Waterford Wedgwood expects a lot of synergies to flow from the acquisition. "Rosenthal brings a complementary range of products with younger appeal," Mr Barnes said. Waterford Wedgwood is on target to increase earnings per share from 4.0p to 4.7p this year. The overall strength in the US is offsetting slower growth in Japan, he said.
Growth of sales in the Japanese market has slowed from 17 per cent last year but it is still experiencing a 7 per cent growth this year despite the financial problems in that market. The Japanese tourist market, however, is suffering but this is a "relatively small part of our business".
