De La Rue Reports a Mixed Bag of Results

LONDON -- De La Rue  (LSE: DLAR  ) , the producer of security documents such as passports and driving licenses and more than 150 national currencies, reported an 8% fall in revenues to 484 million pounds but a small rise in operating profit to 63 million pounds in its results to the year ended March 30, 2013. The operating profit margin was improved from 11.9% last year to 13.1%.

Banknote printing and paper revenues were the main drag with a 12% fall to 298 million pounds. The margin improvement was brought about through planned cost savings such as investing in manufacturing efficiency. Reported profits before tax rose 57% to 52 million pounds, although this was mainly due to far lower restructuring expenses resulting from its three-year plan.

Headline earnings per share rose 2% to 44.4 pence and the dividend per share remained unchanged at 42.3 pence. The group's net debt rose from 25 million pounds in the previous year to 77 million pounds, which could be seen as a concern but interest cover actually rose from 15 times to 18 times, suggesting that De La Rue is living comfortably within its means.

CEO Tim Cobbold commented:

De La Rue delivered an operating profit of 63 million pounds, in line with the prior year, despite a much more challenging banknote paper market, which has also had some impact in the printed banknote market.

Overall order intake reflected the difficult market conditions and an historically low level of overspill volume available to the commercial producers. It was also affected by the previously announced delay to a number of important orders, some of which have since been received.

Looking forward, the year-end order book is down on last year's 248 million pounds to just 207 million pounds but De La Rue insist there is a "strong pipeline of order opportunities." The ongoing improvement plan has increased its cost-saving target by another 10 million pounds to 40 million pounds in 2013/14. With the three-year improvement plan finishing strongly, De La Rue looks to be well positioned for future growth from here.

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