De la Rue profits dive after production problems

24th May 2011 07:58

Profits and revenues fell sharply at De La Rue in the year to 26 March as the banknote printer felt the impact of production problems that are thought to have affected its biggest client, India.Pre-tax profits before tax and exceptional items fell to £33.3m from £104.1m on revenues that slumped to £463.9m from £561.1m. It is paying a final dividend of 28.2p a share making for a full-year dividend of 42.3p, in line with last year.De La Rue has not given specific details of the paper production issues that were discovered in July, but said an investigation found that certain test certificates had been falsified. Production of the banknote paper remains suspended and the company is still in discussions with the customer.The problems resulted in the departure of De La Rue's chief executive and finance director.De La Rue, which received a takeover approach from its French rival Oberthur after a collapse in its share price following the issues, said today that trading has also been affected by a reduction in banknote print volumes not related to the production issues.However, other divisions have seen a rise in revenues. While currency revenues fell to £289m from £411.2m, the cash processing solutions business saw sales rise to £57.4m from £56.9m and those of the identity systems business soared to £62m from £32m. Security products revenue fell to £63.3m from £74.9m."Whilst recognising the challenges ahead, I am confident that, given the strong fundamentals of De La Rue's business, the commitment of its employees and a clear Improvement Plan, we will deliver the value that our shareholders expect," said chief executive Tim Cobbold. "I am determined that De La Rue will become a more efficient, customer focused, innovative business which will be well placed to grow sustainably in the future."---RG