A Mixed Bag in Latest Results from Cash Leaders

Last month, we covered the annual results of five of the major companies in the cash sector – Brinks, Loomis, NCR, Diebold Nixdorf and Crane Co. All bar one reported an increase in both sales and profits, indicating an end to the COVID-induced turmoil of the previous year.

This month is the turn of Spectra Systems, Orell Füssli and Prosegur, where the results are more mixed.

Another profitable year for Spectra

Spectra Systems Corporation is developer of machine-readable, high speed banknote authentication, brand protection technologies and gaming security software. It supplies central banks with covert, high security level 3 features and sensors, both directly and through a well-established licensee.

It announced revenues of $16.6 million for 2021, a 13% increase over 2020. Adjusted operating profit (EBITDA) also gained over the previous year, increasing by 8% to $6.9 million. Net income at $5.16 million was just ahead of the $5.124 million achieved in 2020. The company noted its strong, debt-free balance sheet with cash of $16.775 million compared at the end of 2020, an increase of 19.5%, and its intention to buy back 500,000 shares during this year.

Notable achievements in its banknote sector during the year were the execution of a sensor contract followed by an amendment to include the capability to detect exotic counterfeit notes and a five-year extension of the contract to supply this customer with banknote security materials.

Other developments in its banknote sector were the completion of a vertical integration programme to offer a polymer banknote substrate (Fusion™) with in-built level 3 protection to the industry (a polymer print trial is underway with a Middle Eastern central bank), the validation of the efficacy of the Aeris™ banknote cleaning process for deactivating COVID and the patenting of a new Banknote Disinfection System.

Commenting on the results, Nabil Lawandy, CEO, said that ‘in spite of the COVID pandemic, the company never shut down operations during the pandemic and has delivered an excellent performance during 2021… The Board therefore believes that the company, by achieving key business milestones, will continue to perform well and has excellent prospects for maintaining strong earnings in 2022 and beyond’.

Orell Füssli – a mixed performance

In 2021 Orell Füssli’s revenue fell by 3.75% to CHF 210.4 million, but the company indicated that both the order backlog and incoming orders were at a good level at year end.

However, despite lower sales, its operating profit (EBIT) increased by nearly 7% to CHF 15.4 million. This boosted its operating margin to 7.3%, which the company indicated was due to efficiency improvements, a favourable product mix and stringent cost management.

In Security Printing, revenue fell by 15.4% to CHF 73.82 million – due to a high proportion of export work for banknotes with less complexity, generating less added value. However, EBIT increased by 11% to CHF 6.119 million, increasing the operating margin from 6.3% to 8.3%.

Security Printing was able to win various new customers in 2021 despite the difficult framework conditions. In the reporting year, investments of CHF 5.1 million were made in new production systems, and the division implemented a new generation of modern printing machines, which it says will further consolidate its position as a leading and innovative producer.

According to the company, the order backlog at the end of 2021 ensures good capacity utilisation for 2022 and it therefore expects a slight increase in sales and a higher operating profit for 2022.

The subsidiary Zeiser, a leading provider of serialisation solutions for the security printing industry, achieved sales of CHF 25.3 million, slightly above the previous year, and increased the operating result (EBIT) to CHF 5.5 million from CHF 5.3 million the previous year. A significant individual order for numbering systems from one of the largest banknote printers in Asia ensured high capacity utilisation.

In 2021, Zeiser also took over a portfolio of document inspection and track & trace solutions from Inspectron in the UK and USA. A further milestone was the construction and move at the end of 2021 to a new building in Emmingen in Germany, built according to the latest environmental standards.

Prosegur – difficult market conditions

Prosegur operates in 20 countries, employees over 45,000 people and, for 2021, reported revenues of €3.498 billion, a very slight increase (0.1%) over 2020. However, a 5.8% growth in local currency was achieved due to a recovery in volumes. Of note was the strong growth (>16%) in the USA. 40% of sales came from Europe, 50% from Latin America, and the remaining 10% from the rest of the world.

The company’s operating profit (EBITA) fell by 13.6% to €223 million, leading to a fall in the operating margin from 7.4% to 6.4%.

The result was affected by various factors, including COVID, labour adjustments in Latin America and the company’s digital transformation. However, the consolidated net profit at €59 million matched that of the previous year.

Prosegur Cash, the CIT and cash management subsidiary, achieved sales of €1.52 billion in 2021, an increase of 0.7%. The company reported widespread improvement across all its geographies with organic growth of 7%, albeit turnover continues to be affected by the negative translational impact of currencies.

What it terms New Products activities have maintained positive growth in all markets, in particular Cash Today (the digitisation of cash at the point of sale) and Corban (correspondent banking) stands out. In 2021, New Products reported sales of €326 million, up 15%.

EBITA showed an improvement quarter after quarter, especially in the second half of the year, standing at €185 million, down 0.3% on 2020. The EBITA margin, at 12.2%, remained stable despite the end of the aid programmes.

2021 much better year for K&B

Koenig & Bauer has reported a significantly improved performance in 2021 – with sales up by 8.5% to €1.116 billion, and order intake outpacing the industry average. EBIT was €28.5 million, compared with a loss of €67.9 million the previous year.

In banknote and security printing, which forms part of the Special segment, projects currently in the pipeline point to a continuation of the robust business performance in this sector.

A strong order intake was particular marked in the third quarter, showing – says Koenig & Bauer – that the banknote has retained its rightful place as a means of payment, especially in the pandemic, and will also remain relevant in the virtual world.