Strong currency growth for De La Rue

Max Goldbart
Tuesday, November 21, 2017

De La Rue has seen strong volume and revenue increases in its currency division as it posts improved half-year results.

De La Rue Martin Sutherland
De La Rue Martin Sutherland

In its interims for the first half of the year to 30 September 2017, revenue increased 29.1% on H1 2016, from £189.5m to £244.7m, with £49m of this growth coming from the currency division. Full-year revenue growth for 2016/17 was up 2% on the previous year's figure

Reported pre-tax profit was up 9.9% to £18.9m (2016: £17.2m) and profit after tax was up 9% to £15.8m. Earnings per share also increased 12.1% to hit 14.8p (2016: 13.2p), while dividends remained flat at 8.3p and the IAAS pension deficit was reduced by £48m to £189.1m. 

De La Rue chief executive Martin Sutherland highlighted strong revenue growth as being driven by strong currency performance and “big volumes in print and paper”.

He said: “Polymer has reached a significant milestone with the award of a 10-year contract to supply our polymer substrate Safeguard for the Bank of England’s new £20 note. Performance in the second half is expected to be broadly in line with the same period last year. Overall, our outlook for the year remains unchanged.”

In a webcast this morning (21 November), Sutherland also commended new chief operating officer Bryan Gray, who started in June, in bringing “a fresh pair of eyes to drive more efficiency”.

“Investing for growth is about ensuring we have market-leading products and capabilities presented to the market with a skilled and motivated sales team,” added Sutherland. 

“We are increasingly flexible between in-house R&D and partnerships, depending on what makes most sense for us.”

Last month, the group entered into a strategic partnership with Opalux, a specialist producer of smart materials for security printing applications.

Chief financial officer Jitesh Sodha did highlight a fall in overall adjusted operating margin, which slipped from 12.7% to 10.9%, but said this could be explained by three factors: increased volumes of lower-margin paper and banknotes, higher raw material costs – especially for ink and cotton – and increased investment in R&D and sales, which rose by 33% to £5m during the period.

In its currency division, the group experienced revenue growth of 36%, from £136.4m to £185.3m, while adjusted operating profit, excluding exceptional items, was at £16.6m (2016: £14.3m), a 16% increase. Paper volumes were up 36% on last year’s total at 7,200 tonnes and polymer volumes of 400 tonnes represented a higher volume than the entirety of last year, with the group confident that for the full-year volumes will double.

The identity solutions business saw a smaller revenue increase of 3% to £39.4m (2016: £38.1m), while operating profit remained flat at £5.4m.

In its Product Authentication & Traceability (PA&T) operation, revenue rose £20% to £20.2m (2016: £16.9m), while operating profit was up 7% to £4.6m. This was in part due to the acquisition of US-based DuPont Authentication in January, renamed De La Rue Authentication Solutions (DAS), which specialises in photopolymer holographic films and 3D holograms and associated software for the brand protection and passport markets.  

At time of writing, De La Rue’s share price was at an almost one-month low of 640p. 


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