De La Rue 's (DLAR) commitment to diversifying its business and improving earnings quality looks to be paying off. The group increased operating profit by 5 per cent to £70.2m, with higher paper volumes in the currency-printing business partially covering the impact of a security features contract that ended last year. Revenues in the currency division were down 1 per cent, while adjusted operating profit fell 9 per cent. Although currency still accounts for more than 75 per cent of the group's continuing revenues, efforts to diversify the revenue stream are paying off.
The identity solutions business increased revenues by 5 per cent to £80.6m, while improved margins and a better mix of orders increased adjusted operating profits there by 37 per cent. The product authentication and traceability business also grew, with revenues up 20 per cent and adjusted operating profit up 29 per cent, which was attributed to strong growth in tax revenue protection.
What's more, the order book stands at £387m for the next 12 months, up 6 per cent on last year. That said, around £311m of this relates to the currency division, while the group could face difficulties from the substantial increase in the price of cotton in recent months.
Analysts at Investec are forecasting adjusted pre-tax profit of £59m for the full year to 2018, giving EPS of 46.1p (from £58.7m and 46.5p in 2017).
DE LA RUE (DLAR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 657p | MARKET VALUE: | £668m | |
| TOUCH: | 654.5-657p | 12-MONTH HIGH: | 690p | LOW: 461p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 14 | |
| NET ASSET VALUE: | * | NET DEBT: | £121m | |
| Year to 25 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 484 | 43.7 | 37.4 | 42.3 |
| 2014 | 513 | 59.8 | 47.3 | 42.3 |
| 2015 | 423 | 40.6 | 31.8 | 25.0 |
| 2016 | 455 | 54.9 | 46.8 | 25.0 |
| 2017 | 462 | 58.2 | 47.2 | 25.0 |
| % change | +2 | +7 | +1 | |
Ex-div: 29 Jun Payment: 3 Aug *Negative shareholder funds | ||||
