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* Sharpens focus with shift to two divisions
* Targets annual cost savings of 35 mln stg
* Forecasts margin improvement at currency division
* Shares jump 15%
(Adds detail and shares)
By Yadarisa Shabong
Feb 25 (Reuters) - De La Rue Chief Executive Clive
Vacher conceded that "considerable" work is needed at the
banknote printer as he unveiled plans to improve profitability
by reining in costs and investing in polymer notes.
Turnaround specialist Vacher's plans lifted the company's
shares by more than 15% to 141 pence in morning trade on
Tuesday. De La Rue lost two thirds of its value last year.
As recently as November De La Rue cast doubt over its
ability to continue as a going concern and scrapped its dividend
to tackle mounting debt after setbacks including profit
warnings, a South Sudan corruption investigation and the loss of
a 400 million pound ($518.6 million) contract for Britain's
passports.
The company, which holds the contract to design and make the
Bank of England's new polymer notes, said the cornerstone of its
three-year strategy was to capitalise on a trend of transition
from paper to polymer currency, which so far accounts for only
3% of the world's bank notes by volume.
"I am confident this is the right plan for De La Rue," said
Vacher, who took charge in October.
"There is a considerable amount of work to be done and the
company has a single, focused plan, a fully aligned leadership
team and a greatly enhanced structure."
De La Rue, which prints about seven billion banknotes a
year, said it is targeting annual cost savings of 35 million
pounds from the second half of its 2020-21 financial year,
feeding through to an adjusted operating profit margin in a
mid-teens percentage for its currency business.
Improved cost structures will allow it to tender for
currency orders it would have previously declined, the company
said as it outlined the plans to consolidate into two divisions
with the focus on currency and its authentication business.
The plan envisages revenue of 100 million pounds and strong
operating margins from the authentication business by 2021-22.
The company stuck to its previous forecast for adjusted
operating profit of 20 million to 25 million pounds for its
2019-20 financial year and said it expects to operate within its
banking covenant for the year.
($1 = 0.7714 pounds)
(Reporting by Yadarisa Shabong in Bengaluru
Editing by Bernard Orr and David Goodman)
