Deja vu for De La Rue as over-supply banknote pressures fail to dent profits

● Passport making taking up much of the slack as earnings jump by 37%

De La Rue, best known as a banknote manufacturer, has benefitedfromthefirstgrowth in its passport printing business in three years to help the group post a rise in earnings.

The company yesterday reported a 6 per cent rise in pre-tax profits to £58.2 million in the year to 25 March, up from £54.9m the year before.

De La Rue’s annual revenue was 2 per cent higher at £461.7m, while the full-year dividend for shareholders is maintained at 25p. The latest figures exclude the cash processing solutions business, which the company sold last May.

Underlying profits in the group’s core banknote printing arm, which includes the new polymer £5 note, fell 9 per cent to £50.3m as the market has been impacted by over-supply.

In response, De La Rue has intensified diverification into areas, such as “identity solutions” – passport making – and tax stamps.

Profits in the passport making division jumped 37 per cent to £11.4m in the financial year, while revenues rose 5 per cent to £80.6m – the first increase since 2014.

The results were also boosted by a 29 per cent jump in underlying operating profits at De La Rue’s product authentication and traceability business to £9m.

Martin Sutherland, chief executive of De La Rue, said the group had made “solid progress” two years into a fiveyear plan to diversify the business and improve the sustainability of earnings.

He said the identity solutions and product authentication businesses were “delivering good growth” that was being underpinned by the resilience of the currency division.

De La Rue, which has produced banknotes since 1860, said it received a boost from the fall in the value of the pound since last June’s Brexit vote as it makes more than four-fifths of its revenues overseas.

The company added that it made more than seven billion banknotes last year, while the volume of polymer banknote paper it makes rose 18 per cent to a seven-year high of 11,800 tonnes.

It follows the decision by the Bank of England to proceed with its new plastic £5 note, despite concerns raised by some vegans and vegetarians about the use of animal fat in the production process.

Sutherland said De La Rue had introduced six new products into its pipeline, including DLR Analytics, a software solution to help central banks manage their cash cycle requirements.

The project is being piloted in 26 countries.