Last checked at 2 Dec 2015 07:00
De La Rue plc
Completion of Manufacturing Footprint Review
2 December 2015
De La Rue plc ("De La Rue" or "the Group") announces the results of its review to optimise the manufacturing footprint. This demonstrates positive early progress on the delivery of the five year strategic plan. The main conclusions are:
· Reduction in banknote print capacity from 8bn banknotes per annum to 6bn and in the number of production lines from eight to four
· Expected savings in excess of £13m per annum from FY18/19 in addition to the Group's existing ongoing cost saving initiatives
· Three centres of excellence for banknote print: Gateshead in the U.K., Kenya and Sri Lanka. Closure of Malta banknote production
· Associated capex of less than £30m, half of which is incremental to normal annual run rate, and exceptional restructuring costs of £8m
· Creation of centre for excellence for Identity and Security Print in Malta as part of Invest and Build strategy
Banknote print:
The Group is seeking to maintain its leading position in the commercial banknote market by optimising its manufacturing footprint to deliver the right capability, capacity and cost base. It plans to invest less than £30m. The majority of the investment will be used to replace and modernise existing print equipment over the next two years and to reduce the number of production lines from eight to four. This will reduce core production capacity from current 8bn to 6bn banknotes a year, with ability to flex up to 7bn through built in flexibility. Volumes in excess of 7bn notes will be achieved through external partnerships.
Banknote production will be consolidated into three centres for excellence: Gateshead in the U.K., Kenya and Sri Lanka. The existing banknote production in Malta will discontinue. As an important part of the Optimise and Flex strategy, the restructuring will bring De La Rue's production capacity in line with current market demand, and greatly enhance the efficiency and flexibility of the Group's leading banknote print business.
Security print:
By leveraging its strong market position as the largest commercial supplier of passports, the Group is seeking to accelerate its growth in the Identity and Security Products markets by improving capabilities and investing in new technologies. A significant portion of the overall £30m of capital investment will be invested in equipment and skills to create a centre for excellence for Identity and Security Print at De La Rue's current site in Malta. This will enhance further the Group's Identity and Security Print capability and give the Group a competitive edge to capture the high growth opportunities in these markets. The current Security Print capability in Gateshead, U.K. will be relocated to Malta.
The restructuring plan will require a total capital investment of less than £30m, half of which is incremental to the normal annual run rate, with associated restructuring costs of £8m over the next two years. Through improved efficiency and productivity, the restructuring is expected to generate in excess of £13m annual cost savings from FY18/19 in addition to the existing ongoing cost saving initiatives.
The restructuring will impact around 400 jobs, with approximately 300 being at risk of redundancy, mainly in Malta. A formal consultation with the affected employees is now underway. The proposed plan, subject to the consultation, will complete in the first half of FY18/19.
Martin Sutherland, Chief Executive of De La Rue, said:
"As the leading commercial designer and printer of banknotes and passports, our manufacturing footprint review has identified significant opportunities for improvements in capability and efficiency. Today we are announcing plans to achieve a more streamlined De La Rue, in line with the future needs of our global customers, focused on centres for excellence with investment that underpins our future."
Enquiries:
De La Rue plc | +44 (0)1256 605000 | |
Martin Sutherland | Chief Executive Officer | |
Jitesh Sodha | Chief Financial Officer | |
Lili Huang | Head of Investor Relations | |
Brunswick | +44 (0)207 404 5959 | |
Jon Coles | ||
Oliver Hughes |
Notes to editors
De La Rue is a leading commercial banknote printer, security paper maker and provider of security products and software solutions and, as a trusted partner of governments, central banks and commercial organisations around the world, is at the forefront of the battle against the counterfeiter.
De La Rue, as the world's largest commercial banknote printer, provides customers with a fully integrated range of sophisticated products and services which are available either individually or as a whole. This includes a leading design capability, production of innovative security components, manufacture of security paper and polymer substrates and sophisticated printing of banknotes, all contributing to trust in the integrity of currencies.
De La Rue is the world's largest commercial passport manufacturer in an environment of increasing global concern over security at national boundaries and border control. De La Rue also produces a wide range of other security products, including tax stamps for governments who are seeking to combat illicit trade and collect excise duties. Other products include authentication labels, assuring purchasers of product validity, and government identity documents. In addition the Group manufactures high speed cash sorting and banknote inspection equipment.
De La Rue also provides a range of specialist services and software solutions including government identity schemes, product authentication systems and cash management processing solutions.
De La Rue is listed on the London Stock Exchange (LON:DLAR). For further information visit www.delarue.com