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De La Rue profits fall as currency business remains challenging

Last updated: 18:46 25 Nov 2014 AEDT, First published: 19:46 25 Nov 2014 AEDT

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De La Rue (LON:DLAR) reminded investors that making money is not as straightforward as simply printing it.

The bank-note producer has again warned of challenging trading conditions within its currency business and added that its solutions division - which manufactures passports among other services - has seen lower levels of new business than expected.

Together these issues have negatively impacted the group's outlook for this financial year and next - it anticipates profits will be down some £20mln this year, and reiterated that lower contracted prices come into effect during 2015/16.

It also revealed revenue of £214.9mln for the six months to September 27 which is 8% worse than the same period of last year, and at £18.1mln pre-tax profit was down 36%.

Earnings per share fell 38%, while at 8.3p per share the interim dividend is 41% lower than last year.

Chairman Philip Rogerson pointed to operational improvements and cost savings as potential silver linings for investors.

"While market conditions have resulted in lower revenues, we have partially mitigated the impact in the first half through cost savings from operational efficiencies and have commenced a further rationalisation of our manufacturing footprint," he said.

"The board continues to believe that, while current conditions are tough, De La Rue remains a strong, profitable and cash generative business in a market with good medium and long term growth prospects."

The company also highlighted the 10 year renewal of its contract with the Bank of England, which was secured last month, as well as the appointment of Martin Sutherland as the group's new chief executive officer.

In this morning's statement Sutherland said: "I am confident that, notwithstanding the current challenging market conditions, the fundamental strengths of the business and the operational improvements achieved in recent years, position the group well."

He added that he will be evaluating the group's strategy over the coming months, and he intends to report his findings with the full year results in May.

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