Trading Update

RNS Number : 6755S

De La Rue PLC

26 September 2014

 



 

DE LA RUE PLC

TRADING UPDATE

De La Rue plc (DLAR.L/DLAR.LN) is today updating the market on trading for the six months to 27 September 2014 and its outlook for the remainder of the current financial year and the 2015/16 financial year.

In the AGM statement issued on 24 July 2014 the Board stated that, based on production and shipment schedules agreed with customers, it was expected that the performance of the Group would be more than usually weighted to the second half of the current financial year.  Overall the Group's performance for the first half of the current financial year will be broadly in line with the Board's expectations at that time.  However, trading conditions across the Group have deteriorated such that expectations for the current and next financial year are now lower.

Within the Currency division recent orders secured for delivery in the current and next financial year have been good in respect of volumes but disappointing in respect of pricing.  The challenging market conditions reported at the AGM have deteriorated further with lower prices and reduced margins in both banknote print and paper.

In the Solutions division the rate of growth in new business has been significantly slower than expected and at lower margins.  Within the International business of Identity Systems the trend towards "e" passports from machine readable passports has been disappointing.  In addition a number of prospective orders in the pipeline have not been put out to tender as expected but have been extended with the incumbent supplier.  Within the Security Products business the rate of growth in Government Revenue Solutions has been slow and has not mitigated the declines in some of the other product lines.  The Cash Processing Solutions business is on track to achieve its target of breakeven this financial year.

As a result of the trading conditions described above, and despite the achievement of further cost reductions, the Board expects that for the current year both underlying operating profit and underlying profit before tax will be approximately £20m lower than that reported for 2013/14 (2013/14 underlying operating profit £89.3m,  underlying profit before tax £77.3m). 

Based on recent orders and current trends within both the Currency and Solutions divisions the Board expects the current difficult market conditions to continue in the 2015/16 financial year.    The effect of the more recent pricing pressures together with certain contractual price reductions, which will come into effect in 2015/16, on a number of long-term contracts will impact margins and profitability further.

In light of this more difficult trading environment the Board intends to reappraise the level of the Company's dividend for the full year but expects to announce on 25 November 2014, with the results for the six months to 27 September 2014, an interim dividend of 8.3p per share (2013/14:14.1p).

As previously announced Martin Sutherland, the Group's new Chief Executive will join the Company on 13 October 2014.

Philip Rogerson Chairman said:-

"While disappointing to announce this trading update De La Rue, as the market leading banknote printer, remains a strong, profitable and cash generative business.  We will continue to pursue efficiency gains, invest in the business and in R&D for the future."

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26 September 2014

Enquiries:

De La Rue plc                                                               [phone]

Philip Rogerson           Chairman

Colin Child                   Chief Operating Officer

Brunswick

Jon Coles                                                                       [phone]

Oliver Hughes

About De La Rue plc:

De La Rue is the world's largest commercial banknote printer and passport manufacturer and is a trusted partner of governments, central banks and commercial organisations around the world.

De La Rue also produces a wide range of other security products, including tax stamps, authentication labels and identity documents and manufactures high speed cash sorting and banknote inspection equipment.

De La Rue's Currency division provides customers with a full range of sophisticated products and services which are available either individually or as a whole. This includes design, production of security components, manufacture of paper and polymer substrates and printing of banknotes.

Within the Solutions division, a similar integrated offering from design to manufacture is available. In addition De La Rue offers a range of specialist services and software solutions including government identity schemes, product authentication systems and cash management processing solutions.

In recent years De La Rue has been involved in the production of over 150 national currencies, and passports or identity systems for over 65 countries.

De La Rue employs approximately 4,000 people worldwide and is listed on the London Stock Exchange.

 

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