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De La Rue trading update falls below £100 million operating target
DIFFICULT trading conditions could mean that the world’s largest independent bank note printer De La Rue could miss its £100 million operating profit target.
That is according to today’s market update on trading for the six months to September 28, 2013 and its outlook for the remainder of the current financial year.
The company headquartered in Jays Close, on Viables Industrial Estate, in Basingstoke, expects operating profits for the full year to come in around £90 million – £10 million below a three-year target set out in De la Rue’s May 2011 Improvement Plan.
The trading update has been given ahead of the company’s first-half results, which it expects to be about £39 million in operating profit for the half year, which is up 18 per cent on the six months to September 29, on marginally lower revenues. This improvement, despite more challenging trading conditions, reflects the good progress made on the ongoing cost reduction programme which is on track to meet the targets for the year.
Within the Currency division, banknote print volumes in the first half were down 10 per cent at 2.6bn notes while banknote paper volumes increased by 4 per cent to 4,700 tonnes notwithstanding the challenging market. The continuing overcapacity in the banknote paper market has led to a worsening pricing environment in the printed banknote market with recently confirmed orders, for delivery in the second half of 2013/14 and in the 2014/15 financial year, reflecting this pricing pressure.
The Solutions division overall has traded well with the Identity Systems business delivering a strong performance. In the Cash Processing Solutions (CPS) business the decline in the trading results seen in the second half of 2012/13 has continued into the first half of 2013/14 and as a result this business will report an operating loss in the first half. Management action to reduce costs further has commenced, but it is expected that CPS will report a loss for the full year, with a target of achieving break even in 2014/15.
The group’s 12 month order book September 28, 2013 was £232m, up £25m since the start of the year.
De La Rue will announce its interim results on November 26.
The group, which also has a facility in Overton, has been involved in the design or production of over 150 national currencies.
It also produces a wide range of security documents including passports, driving licences, authentication labels and tax stamps.
In addition, De La Rue manufactures sophisticated, high speed cash sorting and inspection equipment.
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