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Highlights:
- Adjusted operating profit dipped slightly to £7.3 million in the first half of 2024, down from £7.9 million.
- Currency order book surged to a five-year high, reaching £338 million, driven by significant polymer orders.
- Full-year profit guidance maintained, with expectations of growth supported by strong new contracts.
De La Rue PLC (LSE:DLAR), a leading producer of banknotes, reported a mixed performance for the first half of the fiscal year, with profits declining slightly but its currency order book achieving a five-year peak. The company highlighted promising prospects for its currency division, fueled by robust demand for polymer-based banknotes and significant new contracts.
Profit and Revenue Performance
Adjusted operating profit fell marginally to £7.3 million during the six months ending September, compared to £7.9 million in the same period last year. Revenue also saw a 10.2% decline, landing at £145.1 million, while net debt grew by 22.4% to £109.4 million.
The decline in financial performance was attributed to challenging market conditions and delayed revenue conversion from recent contracts. Despite these challenges, the company maintained its full-year adjusted operating profit guidance, anticipating figures in the mid to high £20 million range.
Currency Orders Reach Record Levels
De La Rue’s currency division showed resilience, with its order book hitting £338 million by the end of the third quarter. This marked the highest level in five years, underpinned by a surge in polymer banknote orders. The company noted that material new contracts secured during the quarter would begin to generate revenue in the next financial year, reinforcing growth expectations.
Chief executive Clive Vacher highlighted the strategic importance of these orders, stating, "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."
Outlook for 2025 and Beyond
De La Rue expressed optimism about its long-term prospects, emphasizing an anticipated "substantial upward step change in activity" for 2025 and beyond. The company’s ongoing focus on polymer banknotes and advanced security features positions it well to capitalize on an improving market environment.
Despite the immediate profit challenges, De La Rue’s strategic wins in the currency sector signal a solid foundation for future growth. The combination of significant contract wins and a growing order book reinforces its position as a key player in the global banknote production industry.
Shares in De La Rue dipped 2.3% on Thursday, reflecting a cautious market response to the mixed results. However, with the company’s currency business gaining momentum, it remains well-positioned for the coming years.
