De La Rue value plunges as units are put up for sale

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The Independent Online
BY MARTIN FLANAGAN

The stock market value of De La Rue, the world's biggest security banknote printer, plummeted £320m as it hoisted the `for sale' sign over eight businesses and forecast only modest earnings growth in 1995/96.

The shares fell 143p - nearly 14 per cent - to 889p as De La Rue said the financing costs of the £682m purchase of Portals, the world's biggest banknote paper maker, completed at the turn of the year, would also affect earnings per share in the current trading year. This runs until 31 March and the company predicts earnings per share growth of about 14.3 per cent.

Jeremy Marshall, De La Rue's chief executive, said: "We are shocked. The market's response has been much more dramatic than we expected. We felt we were meeting the new mood of corporate transparency and being helpful, and it seems to have backfired on us."

De La Rue's statement said other factors affecting earnings per share were the issue of new shares as part of the Portals' acquisition price, the subsequent reorganisation costs, and the decision to dispose of certain businesses.

The company added that although the banknote order book remained strong, it had fallen short of the record levels achieved at this time last year.

Mr Marshall said he felt the market had over-reacted. De La Rue had stressed at the time of the Portals' deal that it would not enhance the merged group's earnings until the year ending March 1997.

De La Rue also announced yesterday it intends to sell all of the non- security papermaking businesses and assets of Portals. These include JR Crompton, the producer of data logging devices, Houseman, the environmental services and water treatment products company, Ermeto-Hydexco, which makes tubes for the automotive industry, and Portals Engineering, whose activities include making weighing systems for the food industry.

Analysts suggested the eight businesses being sold could fetch a total of £220m-£240m.

The sales, Mr Marshall said, should not be interpreted as suggesting De La Rue was unhappy with what it had found at Portals.

De La Rue had always said it wanted to focus on businesses involved in the production and handling of cash.

One analyst agreed the market had overreacted and that a 15 per cent share price fall was out of kilter with earnings downgradings that would probably only be around 4 per cent for the current year and 7 per cent for 1995/96.

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