De La Rue outlook meets forecasts

28th Jan 2011 07:05

With French bidder Oberthur now firmly dispatched, banknotes and passports printer De La Rue can concentrate on the serious job of running a business, and it remains optimistic after trading in line with expectations since September.The company, which has been fighting off its rival for the past few months and this week rejected an improved 935p-a-share offer, says recent paper production problems haven't hurt other parts of the business, although banknote supplies to the main customer involved - rumoured to be the Reserve Bank of India - are still suspended. Talks are ongoing.Back in November, De La Rue reported a big drop in underlying interim profit following well-flagged problems at one of its paper production sites. It warned the shortfall won't be made up this year.The paper problems cost it £35m and the resignation of chief executive James Hussey. Analysts at Numis think the potential for Oberthur to return is likely to keep some premium in De La Rue's share price, but the big date for them is 24 May when new boss Tim Cobbold will hopefully reveal the results of a strategic review, firming up timing and scale of the profit recovery and clarity on the dividend policy.Cobbold, who took the hot seat on 1 January, has already made "good progress" in reviewing and assessing the group's operations. "The board remains confident that the group's outlook for the financial year is in line with its previous expectations," read today's statement. Full-year volumes at the currency division will be about 6 billion printed banknotes and 10,000 tonnes of banknote paper. There's been no change at Cash Processing Solutions, while the Security Products unit is still affected by lower internal component sales by the Holographics business due to a drop in banknote print and paper volumes. Volumes are growing at Identity Systems following the launch of the new UK passport in October and the firm should be at full production levels before the financial year end.