De La Rue profit lifted by South Sudan deal: Birth of South Sudan helps put De La Rue back on track

The group said it had spent six months designing and manufacturing a new currency for South Sudan ahead of the country’s creation in July this year.

De La Rue said the contract helped push six-month banknote printing volumes up 12pc to 2.8bn notes, while its currency order book was 14pc stronger.

The company was hit last year by staff allegedly falsifying banknote quality certificates and the subsequent suspension of supply to an unnamed customer, known to be Reserve Bank of India.

De La Rue said supply to the customer remained suspended and that discussions continued over any “cost of resolutions or for potential fines from regulatory authorities.”

However, Tim Cobbold, chief executive, said the business had bounced back from its troubles and had seen no contagion to other customers. “De La Rue’s reputation remains absolutely intact,” he claimed. The company said revenues in the six months to September 24 had risen 14.4pc to £238.1m, helping push operating profits to £31.5m.

Mr Cobbold has set a target of delivering annual operating profits of more than £100m by 2013/14 and said the business remained on track to meet that plan.

However, pre-tax profits in the half year fell from £69m to £27m after the company profited from the sale of its stake in lottery operator Camelot in 2010.

Mr Cobbold declined to comment on speculation of a fresh takeover bid from French rival Oberthur, which failed in efforts to acquire the business earlier this year.

De La Rue shares rose 9 to 885p as it said it would pay a 14.1p interim dividend on January 11.

By Rhys Jones and Neil Maidment

LONDON, Nov 22 (Reuters) – British banknote printer De La Rue said its first-half profit was boosted by a deal to supply currency to South Sudan, the world’s newest nation, and said regime-changes and the euro-zone crisis could fuel further growth.

The world’s largest outsourced banknote printer, which produces over 150 national currencies, on Tuesday said its profit before tax and exceptional items rose 22 percent to 29 million pounds ($45.3 million) in the six months to Sept. 24., led by growth at its core currency production business.

“South Sudan is a brand new country and we have done the currency for that,” De La Rue Chief Executive Tim Cobbold told Reuters.

Sudan, Africa’s largest country split in two earlier this year. The Republic of South Sudan achieved independence on July 9, following Africa’s longest-running civil war.

De La Rue, which will supply another currency shipment to cash-starved Libya in December, said first-half revenues grew 14 percent to 209.2 million and held its interim dividend at 14.1 pence per share.

“Regime change has the potential to create opportunities for De La Rue … if you are an existing supplier to the outgoing regime, they may or may not put you in a good position with the incoming regime to be the continuing supplier, but generally change in that sort of way offers potential to De La Rue and we follow those sorts of things closely,” added Cobbold.

Asked whether the euro-zone debt crisis and the possible break-up of the single currency could benefit the company in the long-run, Cobbold said “that (the crisis) can create opportunities for us” but declined to go into specifics on individual countries.

De La Rue, which will be 200 years old in 2013, said the order book at its currency unit was up 14 percent on the year-end and that print volumes rose 12 percent to 2.8 billion notes.

“Our strong order book in the currency business unit underpins our confidence in meeting our expectations for the full year,” said Cobbold

De La Rue is expected to post an average pretax profit of 54 million pounds for the year to the end of March 2012, according to a Thomson Reuters I/B/E/S poll of seven analysts.

The FTSE 250 group, which saw 2011 profit tumble 68 percent after paper production issues, said it was confident that its ongoing turnaround plan would help it deliver an operating profit “in excess of 100 million pounds by 2013/14”.

The group, which also makes passports, driving licenses and cash processing machines, said its other businesses, especially identity solutions and cash processing, had performed well.

Shares in the firm, up 11 percent in the last three months, were down 0.4 percent down at 872.5 pence by 0950 GMT, valuing the business at around 875 million pounds.

Citigroup analyst Ed Steele said the market “continues to underestimate currency demand recovery” and holds a ‘Buy’ rating on the stock.

http://www.reuters.com/article/2011/11/22/delarue-idUSL5E7MM0KG20111122