De La Rue sees profits up but shares down

De La Rue, the banknote and security printer, is trying to fight its way back to health after a disastrous 2010 which saw its reputation battered by a certification scandal.

The Basingstoke headquartered firm has seen revenues rise to £238.1m in the six months to the 24th of September compared to the same period of 2010, a rise of 14%.

Operating profit on that revenue hit £31.5m, up from £27.8m the year before. However, the key profit before tax figure fell from £69.4m to £27.1m, a worrying drop of 61%. Interim dividend will be maintained at 14.1p.

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De La Rue is an important component in the world's financial system, printing bank notes for dozens of countries, including its biggest customer, India.

It faced a serious problem in July last year when it discovered a production problem at one of its plants and disclosed that some test certificates had been falsified. That led to a drop in share price, the departures of its Chief Executive and Chief Financial Officer and a near takeover by its French rival Oberthur. Since then an "improvement plan" has been implemented.

Key to improvement will be cost cutting. Today's statement outlines a programme of measures to try and reduce overheads, including a reassessment of the supply chain which the group says has already identified £10m in savings.

De La Rue is also looking at moving operations in Dunstable to Gateshead and to relocate its Basingstoke based holographics activities to Westhoughton. These transfers are expected to save £6m annually.

Commenting on today's results De La Rue's Chairman Nicholas Brookes said: "Our Solutions business unit completed the successful ramp up of the UK Passport contract and sales of the large banknote sorter remain good. Our strong order book in the Currency business unit underpins our confidence in meeting our expectations for the full year."

Shares in De La Rue had fallen very slightly (-0.19%) by 10.32am.

BS