De La Rue Share Discussion Threads

[thehearse] 28/9/2014 12:32

Rogerson's statement demonstrated he knows nothing about protecting shareholder value or even an understanding of the BAU activities of the business. There should be an investigation to understand the motives behind his statement E.g. talk down the price in preparation for a take-over, or working with the new CEO to get the bad news published prior to his arrival. Rogerson's statement made no reference to the strength of the pipeline or how the organisation is going to respond to protect margins I.e. basic concepts that contribute to shareholder value. I would have expected to have seen a proposed re-org, right sizing or even an acquisition as a response to margin erosion. IMO I'm expecting a bounce once the new CEO joins. All very fishy to me and needs to be poked at further.

[james smith] 27/9/2014 18:35

Pugugly


www.delarue.com/about-us/what-we-do.aspx
www.delarue.com/products-and-solutions-a-z.aspx

[p1nkfish] 27/9/2014 18:25

711, couldn't agree more.

without something changing DLAR are on the wrong side of evolutionary progress.

could become a kodak.

[pugugly] 27/9/2014 17:47

It is the business model - DLAR are stuck (imo) in the days of paper things when the trend is digital -

Currecy going going to rlrctronic and telephone banking Look at parts of Africa

Passports OK e-passports but probably an inerim stage to a chip in something similar to a credit card of even super-smart phone or facial reader linked to iternational data bases.

Security Now either totally off-line or continuous digital upgrades - The absolute (if even possible) still being developed but possibly a combination of eye scans, instant DNA readers or digital readers or most probably a combination of all 3.

The most secure would be an implnted chip but I suspect totally politically unacceptable - Humuans not yet ready to be reduced to the status of cattle or pets.

Having said all the above (imo) DLAR are in the potential position of hores drawn carriage makers at teh dawn of the automotive wra but exit runway is very much shorter.

[dealy] 27/9/2014 14:53

I firmly believe that the market reaction for all of these stories is totally overdone. Every privately held business goes through ups and downs because the shares aren't traded the hedge funds can't trash the share prices. Certainly in the case of Tesco the reaction is ludicrous imo.

[elmfield] 26/9/2014 21:35

Golly,
Tesco, Tate and lyle then this,
Market is going to get more and more wobbly as one profit warning after another
Hit.

[topvest] 26/9/2014 21:32

Might attract the French bidder of a few years ago to come back again?

[dealy] 26/9/2014 17:50

takeover speculation over the weekend. this company is in a unique position. usual UK market bloodbath followed by foreign takeover. seen it a hundred times before. best example was Corus (ex British Steel) in 2003. Made a killing on that. Expect to do the same here.

[bad robot] 26/9/2014 15:58

I took about -2% loss on morning trade at 562p, glad stop of 550p stop. Bot got this dog under controlled.

Most probably sub 400p -450p. They are wiping out leveraged players who bought for the anticipated result as chairman it was in line of forecast in July.

Yet they did not inform the market as obviously their prospects changed drastically.

[hvs] 26/9/2014 12:45

They is clueless

Kick out theso called " Chaiman".

[salpara111] 26/9/2014 12:41

NO dead kitty bounce....just be careful, the market cap now puts it in the FTSE 350 relegation zone. The next review is not for a couple of months so they have time to right the ship but if not then funds will start selling and it will become a self fulfilling prophecy.
I always expected the banknote business to be poor but was expecting the other areas like ePassports to pick up the slack but it is clear that they are not going to.

[hvs] 26/9/2014 12:30

Philip Rogerson Chairman said:-

"While disappointing to announce this trading update De La Rue, as the market leading banknote printer, remains a strong, profitable and cash generative business. We will continue to pursue efficiency gains, invest in the business and in R&D for the future."

Is it having laugh ???? Not fuuny.

RESIGN RESIGN RESIGN

Kick him OUT

[smurfy2001] 26/9/2014 12:28

Pasted above from market live,

[smurfy2001] 26/9/2014 12:28

There are plenty of other candidates. Go ahead, Rabble. Do your worst.
PM
But this hit to De La Rue is special, no?
BE
(@pfd — was it £53? My brain’s fuzzed.)
PM
I’m trying to think when I saw such a reaction to a front line stock
BE
Third profit warning. They’re becoming an annual event.
PM
But 31%??!?
BE
Towels are being thrown in, I suspect.
BE
So today we have the usual stuff about pricing pressure on paper
PM
statement here btw
BE
Less expected is the bit about international passports
BE
It seems the international e-passport business has slowed
PM
Ah, see the divi is also slashed
PM
results for the six months to 27 September 2014, an interim dividend of 8.3p per share (2013/14:14.1p).

BE
Interesting that volumes and margins in Security Products getting hit. Which is because, I guess, we won that war on terror thing.
BE
Broker response is predictable.
BE
Caz turn negative.
BE
We have lowered our forecast for operating profit (after IAS19R) for FY2015E by 22% from £89m to £69m. We have taken what we regard as a prudent view in assuming no immediate recovery in activity levels in the international passport business (as well as ongoing reductions in margin in both Currency and Solutions) and forecast a further £9m decline in operating profit in FY2016E to £60m. De La Rue has guided to an 8.3p interim dividend. We have taken the view that full year DPS is likely to decline from 42.3p to 24.9p.

BE
Investment case. De La Rue is, in our view, a business with a strong position in an extremely challenging market. With no let-up anticipated in pressure on pricing in both Currency and Solutions, and in light of the reductions to our earnings estimates, we move from a Neutral to an Underweight rating with a revised price target of 600p, December 2015.

BE
Investec turn cautious.
BE
Today’s unplanned update highlights a further deterioration in banknote print and paper pricing as well as weak Identity Systems demand. The company is guiding to c.£69m of EBITA (post IAS19) in FY15 versus £89.3m in FY14. We had forecast £88.2m, which we have lowered to £64.1m (28% down), more conservative than guidance. The company has also signalled a cut to the full year dividend with the interim payment likely to be 8.3p. We assume FY15E DPS reduces to 25.0p from 42.3p (1/3-2/3 split). Our PT falls to 600p. Hold.

BE
Market conditions: In the last 18 months, De La Rue has experienced deteriorating pricing across Currency, given increased market supply, with particular pressure seen in banknote printing in recent months. At the AGM (in July) the group was assuming that pricing would hold at prevailing levels. However, recent tenders have confirmed a further deterioration despite volumes holding up – this is also impacting on outer years. Identity Systems has seen a number of pipeline opportunities disappear as work has been retained by incumbents. This has impacted growth and margins.
1H results: As last year, the interims are expected to be broadly in line with expectations, but the trends in order intake will impact on the full year. We are forecasting 1H EBITA (post IAS19) of £25.9m. Results are on 25th Nov.
Forecast changes: We reduce FY15E/FY16E EPS by -35%-43%. At EBITA level, the downgrade is -£24.1m (-28%)-£33.5m (-36%) – comprised in FY15E of -£16.7m in Currency and -£7.4m in Solutions (almost all Identity Systems), giving margins of 13.3% and 12.5% respectively. Revenues reduce by c.£50m/c.£70m. Net debt increases by c.£12m, on lower profitability versus our previous forecast, representing a comfortable net debt/EBITDA ratio of 1.1x
Valuation: We reduce our price target to 600p, which reflects 15.1x CY15E EPS (the 10-year average). We expect the stock to fall heavily today, after a series of setbacks, especially given the signalled cut to the dividend.

BE
Numis ditto.
PM
“unplanned update”
PM
I’ll say
PM
Sorry, go with Numis
BE
Yeah, if it walks like a warning and quacks like a warning ….
BE
Analyst here is Charles Pick.
BE
The warning today is a grim one. The dividend – held through the tough times of the
past – is now to be cut, whilst PBT this FY will be c.25.9% lower than last FY. Odd
that nothing was said on trading when the BoE contract renewal was announced
on 8 September but tender pricing issues for Currency appear to have arisen only
in recent weeks.

PM
That’s more like it
BE
Warning: The 24 July IMS produced no surprises bar that results this FY would be
more H2 loaded. This has changed: 1) Trading conditions have deteriorated such that
expectations for both this FY and next FY have been lowered. 2) At the Currency
division, recent orders for delivery this FY and next have been good in terms of volume
but disappointing regarding pricing. The challenging market conditions of 24 July have
deteriorated further, with lower prices and margins in respect of both banknote printing
and paper. 3) At the Solutions division the rate of growth in new business has been
significantly slower than expected and at lower margins. For the International part of
the ID Systems the trend towards ‘e’ passports from machine readable ones has been
disappointing, plus some orders that had been expected to be put out to tender have
been extended with incumbent suppliers. In Security Products, the rate of growth in
Government Revenue Solutions has been slow and has not offset declines in some
other lines. Only Cash Processing Solutions seems in line – is on track for break-even
still this FY. 4) Underlying EBIT and PBT will be c. £20m lower this FY than last FY
(-25.9% and -26.3% vs our estimate for this FY). 5) There will be knock-on effects too
next FY. 6) The H1 dividend is to be -41.1% at 8.3p and will be reappraised for the
full FY.

BE
Feedback: The Currency division has seen intense pricing pressures in recent weeks
(banknote print prices typically -12%) with severe operational gearing effects. De La
Rue has been forced to follow suit. Banknote paper markets have stabilised and are
not the cause of matters. We estimate Currency could account for £12m of the £20m
EBIT decline. Passport issues have been key to the Solutions division: only 3 of 13
expected contracts came to tender. For Y2, the mention of “certain contractual price
reductions” is normal, but business growth elsewhere will not now offset these as had
been expected. Net debt could be £115-120m at y/end vs prior guidance of £100m.

BE
Comment: TP cut to 540p. This is a major warning and it is hard to easily see that
Currency division margins can revert even to last FY’s levels unless some rivals to De
La Rue go under.

BE
(@pfd: by writing the not pre open, one imagines.)

[hvs] 26/9/2014 12:27

Philip Rogerson Chairman said:-

"While disappointing to announce this trading update De La Rue, as the market leading banknote printer, remains a strong, profitable and cash generative business. We will continue to pursue efficiency gains, invest in the business and in R&D for the future."

Its having a LAUGH.

RESIGN RESIGN RESIGN

Turf it out.

[smurfy2001] 26/9/2014 12:27

BE
So cast your mind back to 2012, when Oberthur was told that 935p significantly undervalued De La Rue.
De La Rue PLC (DLAR:LSE): Last: 525.72, down 233.28 (-30.74%), High: 591.00, Low: 522.42, Volume: 1.29m
PM
My word
BE
There are plenty of other candidates for “significantly undervalued”

[spadman] 26/9/2014 12:07

People youre not listening, this is a dinosaur business model doomed to extinction, the future is on the blockchain, the days of printing monopoly money are coming to an end.

Meanwhile the future of money and all things secure (bitcoin) has to be the buying opportunity of the year.

Remember BITCOIN

[iaincc] 26/9/2014 11:39

Have I got the maths wrong ?

With EPS of say 16p and a generous PE of 15 Share price = £2-2.50

At which point the 8p dividend is effective 3.2%

That's about as attractive as the Chairman's future

[essentialinvestor] 26/9/2014 11:10

It was not a pop at you QP, I have seen your make some great calls, no guarantees in the market.

[lebiche] 26/9/2014 11:06

Now, that's what you call a drop.

[meijiman] 26/9/2014 10:56

They have done the heavy lifting for the new ceo who arrives shortly. Saves him or her doing a kitchen sinking.
This really stinks -an appalling statement, after the 'steady as she goes' earlier.
Hopefuly it will get taken over.

[sundance 13] 26/9/2014 10:51

They (BoD) will always try and defer reporting bad news until the point where it's clear there's no way back in terms of meeting expectations.The one exception to the above is where a new board is in place where they look to under promise on expectations and get all the bad news and more out in the 1st year.

[quepassa] 26/9/2014 10:27

I can but reiterate Salpara's comments in 685.

Exactly two months ago on 24th. July, this is what the Chairman of De La Rue said in his Outlook:-

"With a satisfactory first quarter performance, together with a good order book and a pipeline of order opportunities, which must of course be secured for delivery in the current year, the Board's expectations for 2014/15 remain unchanged."

How could the Chairman get it so badly wrong?

Time for the Chairman to resign?

I think the Board owe the market a full explanation as to how in two months they go from " the Board's expectations remain unchanged" to today's different story.

ALL IMO. DYOR.
QP

[essentialinvestor] 26/9/2014 10:03

QuePassa appears to be missing in action?.

Ironically he has made some great calls on the short side.