De La Rue International Plc, the UK banknote printer which has repositioned itself as a ‘cash-to-cards’ company, is beginning to reap the benefits of the recent expensive restructuring of two of its four divisions. Although it saw last year’s net profit of 55.4m pounds turned into a net loss of 13.1m pounds ($21m) from revenue down 6.6% at 737.9m pounds ($1.19bn) for the year to March 31, the company’s emerging smartcard business is booming and its established security, paper and print sector appeared to turn the corner in the second half.
The root of the company’s loss lies in a reorganization generated by a major restructuring of the group’s Cash Systems division, including the transfer of its HQ from London to outlying and cheaper Basingstoke offices, and the integration of its Italian card manufacturing acquisition Cellograf. The latter arrived complete with a loss making terminals business which was successfully sold in January for 9.5m pounds ($15.3m).
Elsewhere, De La Rue’s Card Systems sales rose 31% to 161m pounds ($257.9m) with profits up more than 50% at 4.7m pounds ($7.5m), and the Security, Paper and Print division posted an encouraging second half performance, with revenue reaching 23.1m pounds ($37.1m) in the last six months, compared to the first half’s 18.4m pounds ($29.5m).
Ian Much, the group’s chief executive appointed in September 1998, attempted to distract attention from the company’s poor product performance by announcing the creation of a fourth business division, devoted to customer services. De La Rue is no longer really a products firm, he argued, pointing to services revenue now running at more than 100m pounds ($161m). The customer service sector will be active by the end of this year, and a managing director for the new division will be appointed by the early part of 2000, a De La Rue spokesperson said.
