UK's De La Rue sees signs of demand recovery, shares rise
Reuters
Published Jun 29, 2023 08:11
Updated Jun 29, 2023 09:42
(Reuters) -De La Rue on Thursday showed signs of recovery in currency demand and continued strength in its authentication business especially towards the second half of the year, sending shares in the British banknote printer up nearly 12%.
The London-listed firm, which has struggled in recent years due to subdued currency demand and a number of operational hurdles, reiterated its full-year adjusted operating profit forecast to be in the low 20 million pounds ($25.28 million)range.
Analysts are expecting profits between 21.6 million pounds and 22.6 million pounds for FY24, according to company-compiled estimates.
De La Rue (LON:DLAR)'s battered shares rose to 40.85 pence by 0750 GMT, as the company also said it no more saw "material uncertainty" in its ability to continue as a going concern and successfully negotiated borrowing facilities with lenders, leading to a significant relaxation in interest cover.
De La Rue also said it expects its cash position to improve significantly after reaching an agreement with its pension trustee to defer its deficit contribution to the FY26-29 time frame.
The company had earlier said it had requested its pension trustee to defer its deficit contribution of around 18 million pounds.
"A lot of the challenges we faced was due to a very important currency downturn over the last 12 or 18 months," Chief Executive Officer Clive Vacher said in an interview.
"We are seeing encouraging signs of that recovering and we do expect further recovery as we go through the next financial year," Vacher said, adding a significant majority of current year banknote print volume had already been contracted.
Meanwhile, De La Rue has been turning around its business, including by investing in polymer notes and cutting costs.
The more than 200-year-old company is also betting on its growing authentication business, which designs and makes secure documents as well as security features such as holograms to authenticate goods to sustain growth.
Adjusted operating profit for the year ended March 25 fell to 27.8 million pounds from 36.4 million a year earlier.
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Its annual revenue fell to 349.7 million pounds from 375.1 million.
($1 = 0.7919 pounds)
Written By: Reuters
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