Amid Euro Crisis, This Company Is Literally Printing Money

For Minyanville: Global instability is usually anathema to stolid, centuries-old companies. The opposite is true for De La Rue (DLAR.L).

The 189-year-old British company prints the currency for 150 of the world’s countries as well as other security documents such as passports and postage stamps. The company’s stock price is up just over 10% on the year, having hit a 52-week high earlier this month on rumors that the company was ready with plans to print drachma notes when Greece leaves the euro.

An anonymous source said this much to Reuters the week before last. The company’s CEO, Tim Cobbold has previously said that De La Rue could design and deliver currency for a new country within six months.

It is looking increasingly likely that Greece will exit the euro despite promises from most European leaders to ensure Greece staying in. EU Trade Commissioner Karel De Gucht even let it slip that the EC and ECB are working on contingency plans in case a Greek exit is unavoidable.

If De La Rue actually does get Greece’s business for printing the new drachma, it will only be in a supporting role. Greece, like other European countries, has its own local printers. It is hard to imagine the patriotic embarrassment that a decent-sized country would feel if they couldn’t even handle their own banknote production. Greek printers, however, might not be able to produce drachmas in time. This is, after all, a country that couldn’t manage to send out tax forms because they ran out of ink.

Even if this whole drachma business is a bunch of trader-rumor malarkey, the company’s valuation might be getting better for much more boring reasons. Today, De La Rue announced its year-end earnings, which showed that revenue had grown by 14% and operating profits grew by 56% over the previous year.

One highlight of De La Rue’s Year was the design and production of the currency of the world’s youngest state, the South Sudanese pound. That work helped the company recover from a 2010 scandal involving falsified paper specifications for several clients, including the Reserve Bank of India, De La Rue’s biggest client.

When asked directly about possible business opportunities coming from the breakup of the euro, Cobbold refused to comment.

“It has always been De La Rue’s policy never to comment on matters of that type. And you really shouldn’t read anything particular into that answer.” With regards to the Arab Spring and the possibility new prospects there, Cobbold said that the company is “very well placed to benefit from the geopolitical events.”

Overall, currency printing is a great business to be in — if you can get in on it. Which few can.

De La Rue “operates in a market which has high barriers to entry, and offers robust long-term growth. We’ve got long standing relationships with our customers, and a good record of technical innovation. And, to add to that, it is a business that generates high margins and throws off a lot of cash,” the CEO said.

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