De La Rue lifts profit guidance after currency boost

Banknote printer De La Rue said it expects full year profits will be better than current forecasts as new management made progress with their five-year plan.

De La Rue said that, while revenue rumbled on "broadly in line" with expectations, full-year underlying operating profit is now anticipated to be around £62m, which is significantly above analyst forecasts.

The company, which tumbled out of the FTSE 250 index last summer as its shares continued to track dwindling group profits in recent years, said the encouraging signs of the first half-year had continued in the final months of the year to 26 March.

"This higher level of operating profit has been driven mainly by strong operational outperformance on certain contracts within our currency business," De La Rue said in the unscheduled announcement.

Both the Identity Solutions and Product Authentication and the newly named Traceability (PA&T), the division formerly known as Security Products, were said to have been trading "broadly in line" with expectations, which typically means "slightly lower".

Net debt at year-end stood at £106m, which is a £5m improvement fro the year before and another beat to market estimates.

Management said their expectations for the next financial year remained unchanged, but provided no update on the 'root and branch' review of its Cash Processing Solutions (CPS) division, whose poor performance dampened first-half results.

Analysts at Investec said the operating profit figure was 12% higher than its forecast and it believed the better debt number was due to improved working capital metrics and lower capex.

"We see this as an encouraging update, especially the improved cash position which helps underpin the dividend. There remain lots of self-help opportunities at De La Rue, but these are positive steps in the right direction," they said.

DLAR shares, having in mid-February fallen to a 13-year intraday low below 400p, stood at 481p by 1445 BST on Wednesday, an 11% rise on the day.