(Reuters) - De La Rue Plc (DLAR.L), the world's largest commercial banknote printer, is scouting for potential joint venture partners for its business that makes paper for banknotes, its chief executive said.
The company would also look at small bolt-in acquisitions in its personal identification business, as it looks to grow the business that also makes UK passports, CEO Martin Sutherland told Reuters.
Shares in De La Rue rose as much as 7 percent on Tuesday, after the company reported a higher full-year profit, indicating that it had made strategic progress in the first year of a five-year turnaround programme.
As part of the cost-saving plans, De La Rue is working to reduce its paper production over the next few years to bring production in line with falling demand for paper banknotes.
Sunderland said De La Rue was making good progress against the plans, which include reducing production lines to four from eight and print capacity by 25 percent to 6 billion banknotes a year.
The company on Monday announced the sale of its loss-making cash processing business for up to 10.1 million pounds.
JP Morgan Cazenove analysts hiked their operating profit estimates for the current financial year by 7 percent to 65.6 million pounds, citing the benefits from the sale of the non-profitable business.
De La Rue, which prints over 150 national currencies, said on Tuesday underlying operating profit from continuing operations rose 2 percent to 70.4 million pounds in the year ended March 26.
Currency, the company's largest business unit, was the driver of growth, benefiting from overspill contracts that bumped up banknotes volume by 9 percent to 7.1 billion and banknote paper by 6 percent to 10,000 tonnes.
Sutherland forecast a growth of about 3 percent to 4 percent a year in the banknote business this year.
"It's a lumpy business, but the long term trend is a clear growth one and there are more bank notes in circulation today than there have been historically," Sutherland said.
De La Rue shares were up about 4 percent at 529.5 pence at 0846 GMT.
Reporting by Esha Vaish in Bengaluru; Editing by Sunil Nair