De La Rue shares dip as bank note printer reveals decrease in earnings

The 211-year-old group is in the process of being broken up after agreeing the sale of its authentication arm in October for £300m

De La Rue, the banknote printer, has reported a decline in half-year earnings due to the underperformance of its currency division and contract timing.

The company revealed a 7.6% decrease in underlying earnings to £7.3m for the six months ending September 30, with revenues dropping by 10.2%. The sole remaining currency division saw underlying earnings fall by 21% to £1.1m in the first half, as some contract deliveries were postponed to the second half, resulting in a 16.3% revenue drop in the division during the first half.

De La Rue shares were down by 6% in Thursday morning trading. In October, the 211-year-old firm agreed to sell its authentication arm to US-based Crane NXT for £300m, leading to the break up of the business which has been grappling with reduced cash demand since the pandemic.

In July, it expressed concerns over its ability to continue due to a loan repayment due in July next year. However, the deal with Crane NXT will enable full loan repayment and help reduce the funding deficit on its former defined benefit pension scheme, according to De La Rue.

The company is also in discussions regarding the potential sale of its currency division. Despite these challenges, the group maintains that its currency business has a promising future due to recent contract wins, with its order book valued at £251.7m at the end of September, an increase from £239.2m as of March 30.

It said: "The deeper order book in currency is beginning to translate into higher production volumes and revenue, sufficient to bring currency revenue for the full year back in line with 2023-24 levels." The group announced that it is on course for an annual underlying earnings bracket of "mid to high £20 millions".

In terms of statutory figures, the group experienced a reduction in interim pre-tax losses, down to £6.5m from last year's £16.8m. Clive Vacher, De La Rue's Chief Executive, remarked: "We have also built up the currency order book to the highest levels seen for at least the last five years."

He further stated: "The material new orders that we have won in recent months will begin to convert into increased revenue as we move into the next financial year and solidly underpin our growth expectations."