British moneymaker De La Rue is in talks with governments about “immunity certificates” for people who have tested negative for Covid as well as authentication for pharmaceutical companies to safeguard vaccines through the supply chain.
The company on Wednesday said its multiyear turnround plan was already delivering after a sevenfold jump in first-half adjusted operating profits.
Clive Vacher, chief executive of De La Rue, said the company had strengthened its balance sheet, with net debt reduced from £171m to £21.6m after an equity raising of £100m in July.
“The cost-reduction programme is essentially complete,” he said, pointing to plans to strip £36m in costs from the group every year. The company is on track to save £23m in costs in its fiscal year 2021.
Mr Vacher was brought in last year to drive a recovery strategy for De La Rue, which was struggling after the loss of its passport-making contract amid heavy competition for banknote printing.
The company is investing in next generation polymer production of banknotes, which are slowly being adopted by countries around the world. Mr Vacher said its banknote factories were running at full capacity into next year, although the company would finish production for good at its Gateshead operation next month.
Central bank demand for cash during the coronavirus pandemic helped prop up its currency division, De La Rue’s largest by sales. The Essex-based group recently extended its Bank of England banknote printing contract through to 2028. De La Rue is designing and manufacturing the Bank of England’s new polymer £50 pound note due out next year.
Mr Vacher said the company was in talks with governments and pharmaceuticals about using its authentication technology to help roll out vaccines.
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“We have got great products that can authenticate vaccines and test kits, and provide immunity certificates. It’s all at a very early stage so difficult to say if it’s going to turn into something or not.”
Shares in the group dropped by almost 8 per cent on Wednesday, to 167p. Mr Vacher suggested the fall followed a strong run for the stock, which had been trading at about 134p at the start of the month.
Adjusted operating profit was £15.3m for the six months to September, compared with £2.2m a year earlier.
Overall revenues slipped by about a fifth to £180m, a decline that was exacerbated by the sale of the group’s international identity solutions business in October 2019 and the end of De La Rue’s UK passport contract.
It aims to be generating positive free cash flow and able to pay “sustainable cash dividends” by the end of the 2023 financial year.
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