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Banknote printer De La Rue has said its turnaround plan is bearing fruit as it posted a 61% jump in annual earnings after slashing costs.
The group saw underlying operating profits – the company’s preferred measure – soar to £38.1 million for the year to March 27, up from £23.7 million the previous year.
It has now cut annual costs by £36 million in total as part of a major three-year overhaul, having stripped out a further £23 million in the past year, and the group plans to shave another £7 million off in 2021-22.
But as a result of stepping back from passports – or its identity solutions business – full-year revenues fell 10.2% to £388.1 million.
This affected its bottom line, with annual pre-tax profits from continuing operations tumbling to £9.9 million from £36.1 million the previous year.
Chief executive Clive Vacher told the PA news agency that De La Rue remains in talks with governments over possible Covid-19 vaccination passports.
He first revealed discussions last autumn, but said on Wednesday he was unable to comment on how close the UK or other countries may be to deciding on any vaccination certificate programme.
“We continue to be in discussions with governments as to whether they might look to deploy it,” he said.
“But my business plan has zero in it for Covid-19 passports, because it is too uncertain,” he added.
The company, which sold its identity solutions arm in 2019, is going through a three-year turnaround plan which includes reducing debts and moving away from making passports.
Its cost-cutting moves have also sparked job losses at the group, but it is now rehiring in other areas, at a new plastic banknote printing site and across its authentication business.
Mr Vacher cheered the success of the overhaul so far and the group added that the new financial year had “started well”.
He said: “Both our ongoing divisions are performing well and the group has delivered good growth in adjusted operating profits as we complete the first full year of our turnaround plan.
“We see a strong pipeline of business for full-year 2021-22 and continue to expect to deliver the full financial and operational benefits of the turnaround plan during the year.”
Net debt was reduced to £52.3 million at the end of March, down from £102.8 million a year ago, helped by raising £100 million from shareholders last summer.
The group has been putting resources into plastic banknote manufacturing, having lost the contract to print Britain’s blue Brexit passports to Franco-Dutch company Gemalto three years ago.
This saw the group shut its Gateshead factory, affecting hundreds of jobs.
It recently won a new Bank of England contract to print plastic notes, starting in July 2021, and is responsible for the design and manufacture of the new £50 note that comes out in June.
The group has bought a new building next to its existing site in Westhoughton, near Bolton, in Greater Manchester to double polymer production capacity.
Shares in the group fell 2% despite the headway being made under the turnaround.
Analysts at Numis Securities said: “The stronger-than-expected performance during the first year of the turnaround plan helps to underpin our confidence in continued progress over the next two years.”