May 29, 2012 / 6:33 AM / in 6 years

UPDATE 2-Money printing boosts profits for De La Rue

* Year pretax profit up 73 pct at 57.7 mln stg

* Revenue up 14 pct to 528 mln stg

* Year-end order book up 14 pct at 248 mln stg

* Total dividend maintained at 42.3p

* Declines to comment on Greece, euro zone opportunities

* Shares down 1.6 pct

By Neil Maidment

LONDON, May 29 (Reuters) - A strong demand for new money helped profits bounce back at De La Rue, the banknote printing firm said on Tuesday, but it declined to comment on whether presses are ready to roll out the drachma yet should Greece leave the euro zone.

Reporting results for the year to March 31, the British firm, which prints over 150 national currencies as well as passports such as the UK‘s, said underlying pretax profits rose 73 percent to 57.7 million pounds ($91 million), slightly ahead of the consensus market forecast compiled by the company of 55.7 million pounds.

Analysts at Panmure Gordon said the firm was back on the front foot after it was hit two years ago by production problems and the suspension of work with its biggest customer, the Reserve Bank of India. However, the immediate market attention is focused on the possibility of it getting a deal to print Greek drachma notes.

Shares in the FTSE 250 firm were down 3.4 percent at 975 pence at 1046 GMT, valuing it at around 1 billion pounds.

“In the short term sentiment is likely to be dominated by thinking through the ramifications of a euro break-up and the possible effects on the banknote printing market (likely to be a positive), and we believe De La Rue could be a distinct beneficiary,” the analysts said in a research note.

Last week an industry source told Reuters that De La Rue had drawn up contingency plans to print drachmas but on Tuesday its chief executive Tim Cobbold declined to comment.

Cobbold had previously told Reuters in November that regime changes and the euro zone crisis could create opportunities for the firm.


New orders and increasing demand for counterfeit protection pushed De La Rue’s banknote volumes up 8 percent to 6.4 billion notes last year, meaning the firm printed around one in two of all new banknotes produced.

Banknote demand also pushed paper volumes up 11 percent, although market competition had become more challenging the firm said. It added that it hoped a recent move into producing more expensive polymer-based notes would help offset some pressure.

“We’ve launched our first polymer-based banknote. Hitherto that has been supplied by a single supplier but now De La Rue has entered that market that single supplier (Australian firm Securency) I think will find life more difficult going forward,” Cobbold told reporters.

De La Rue said it was on track to increase annual operating profits from 63.1 million pounds in the year just ended to over 100 million pounds by the 2013/14 year, through cost savings and revenue growth as it looks to recover from the problems that hit profits last year.

De La Rue, said its order book now stood at 248 million pounds, up 14 percent on a year ago and underpinning its expectations for the current year, which it said remained unchanged.

According to a Reuters poll of analysts it is expected to turn in a pretax profit of 70 million pounds in the current year.

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