Profits Up for De La Rue, Despite Headwinds

De La Rue’s sales fell marginally in 2021/22 – revenue (non IFRS) of £375 million and operating profit of £36.4 million were down 3.3% and 4.5% respectively on the previous year.

The IFRS (statutory) results, meanwhile, showed the same revenue, but operating profit (continuing operations) of £29.7 million more than doubled over the £14.4 million of the previous year.

Currency achieved adjusted sales of £281 million, marginally down on the previous year, and operating profit of £19.5 million, up 20.5% compared with 202/21.

Progress in turnaround plan

Further progress was made in the Turnaround Plan’s objectives for Currency, which were to improve the profitability of banknote printing by increased utilisation from a smaller number of facilities, to support customers around the world to convert to polymer and to develop a portfolio of security features that are the choice of a growing number of customers.

The company will enhance its flexibility by more than doubling its capacity for manufacturing polymer substrate with the introduction of a new, second line, and is also increasing print capacity with the expansion of its facility in Malta.

The company noted that demand for banknotes returned to lower-than-normal demand levels following the high demand experienced during the pandemic, resulting in the division producing lower overall volumes in banknote printing and security features year on year.

However, polymer substrate sales showed continued growth – increasing by 40% over the period – as more countries, including Egypt, Libya, and Jamaica, announced the introduction of polymer notes.

Outlook

The company stated that ‘since the end of the financial year, De La Rue has experienced further headwinds that are anticipated to have an impact on adjusted operating profit on FY 2023. While the company is making significant progress in its transformational programme, the external environment is providing a substantial degree of uncertainty in its outlook.’ In particular, supply chain inflation is anticipated to increase operating costs by an additional £5 million, and the disruption may affect revenue.

For the current year, the board now expects that adjusted operating profit will be roughly the same as last year, weighted towards the second half.