De La Rue beats expectations, turnaround costs rise

Bank note printer De La Rue has reported revenues well ahead of expectations but cautions its current improvement plan is set to cost more than originally anticipated.

Revenue for the group, which produces currencies for over 150 countries, was £528.3m, against a consensus forecast of £507m. That was a 14% increase on revenue of £463.9m in the previous year.

Underlying profits before tax rose 735 to £57.7m from £33.3m the year before, against expectations of £56.8m, while earnings per share also beat forecasts of 42.4p, instead coming in at 43.5p, up 81% from 24.0p the year before.

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Reported profit before tax slumped 55%, however, to £32.9m from £72.8m the year before, as the previous year's numbers were boosted by a £55.1m profit on the sale of an associate company; exceptional charges this time round were also higher, at £24.8m, versus £15.6m the year before.

The group is split into two divisions, Currency, which prints the bank notes, and Solutions which produces banknote sorters and security products

The Currency unit printed 6.4bn notes, up 8% on the prior year, and reported a gain in operating profit of 59%.

Solutions saw profits hit £17.8m, a 50% gain on the prior year.

Last year was difficult for De`La Rue, as it hit quality problems with some of its bank notes and faced a takeover offer. In response it launched the "improvement plan" to cut costs and improve operations. That plan will now cost an extra £10m to finalise, on top of the £25m already committed.

Commenting on the results, the Chief Executive, Tim Cobbold, said: "While recognising there is still much to do, I am confident that with the momentum we have established, we are on track to achieve our target of a 2013/14 operating profit in excess of £100m."

The market seemed non-plussed by the results, shortly after the open, the stock was down 0.27%.

BS