23rd Oct 2013 07:21
LONDON (Alliance News) - De La Rue PLC Wednesday said it expects full-year operating profits to miss fall short of its GBP100 million target, amidst more difficult trading conditions in its Currency division and Cash Processing Solutions business.
The banknote printer said it expects operating profits for the full year to come in around GBP90 million, GBP10 million below a three-year target set out in the company's Improvement Plan in May 2011.
The company, which was giving a trading update ahead of its first-half results, said it expects approximately GBP39 million in operating profit for the half year, which is up 18% on the six months to September 29.
De La Rue said the increase in operating profits reflects ongoing progress in making cost reductions, as revenues were marginally lower.
The cost production programme is on track to meet its full year targets, the company said.
De La Rue, which also makes passports and identity cards, warned that its Currency division faces a worsening pricing environment in the printed banknote market because there is overcapacity in the market. The company said its recently confirmed orders, set for delivery in the second half of the current financial year and in over the course of the next financial year, reflect the pricing pressure in the printed banknote market.
"The board is pleased with the level of order intake in the Currency division but anticipates that the pricing environment in the second half of 2013/14 will continue throughout 2014-15," the company said in a statement.
The Solutions business, which includes government identity schemes, product authentication systems and cash management processing, has traded well overall, De La Rue said, even though the Cash Processing Solutions business has continued to decline.
De La Rue said the Cash Processing Solutions business, which offers services to manage cash in bulk, would report an operating loss in the first half.
The company said it has taken action to further reduce costs, but the cash processing business is still expected to make a full-year loss, with a target to break even in the 2014-15 financial year.
De La Rue said its 12-month order book, as of September 28, was GBP232 million, up GBP25 million since the start of the year.
De La Rue shares were Wednesday morning quoted at 905.00 pence, down 7.8%.
By Samuel Agini; [email protected]; @samuelagini
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