Reasons to be Cheerful, Part 3

We gave some reasons to be cheerful in our comment in the July issue, and given the current daily predictions of financial collapse and economic gloom accompanied by highly volatile financial markets, we thought it is useful to see if the currency industry still does have good reason to smile!  (And if you are wondering about the headline – we have stolen it from Ian Drury and the Blockheads, a pop group in the 1970s and a favourite of the editor).

Last month we published the mid- term results from some of the quoted companies in our industry and this month we see in Industry Watch how they are faring compared with their markets. Taking a measuring stick to both, the results are pretty good.

Many of the companies are ahead of their first half the year before, and in the last three months only four of the ten companies reviewed have lost ground against their respective markets. Interestingly, the same is true over the last year, only four companies have under-performed against their market, but with the exception of one – Wincor Nixdorf – they happen to be different companies. One could argue that it depends where they started from and that the markets are fickle – and both have ring of truth. But these statistics are solid facts and a 60% positive performance of an average 9% above the norm is undisputedly good news.

We also see in this issue, and in others this year, that companies are investing in R&D, new equipment and in acquisitions, and the latter are not failed bargains from the tough economic conditions but, in the main, form part of a positive long term growth strategy. The recent acquisitions by Toshiba of Non Linear Concepts, by the Mint of Finland of Saxonia EuroCoin and by Amera of ARMAT are just some examples, along with OKI’s expansion into the banknote sorter market, GURT’s investment in new plating capacity and G&D and Wincor Nixdorf’s joint venture in cash cycle solutions.

And the investments are not limited to private or quoted companies – state-owned industry organisations are investing too.

This month we report that Chile is investing $90m in a new state of the art banknote production line, following its near-neighbour Brazil whose mint and printworks has just invested in three new banknote lines. Goznak has new banknote printing lines, the Philippines is making a similar investment and the government of Kenya is poised to take a 40% stake in the printing plant in their country. India is installing a new paper machine at its existing mill and maybe two others at a new mill to be built on a greenfield site.

The industry is continuing to invest in technology too, as evidenced by a whole new range of security features on display at Banknote 2011, a conference which drew record numbers. In a struggling industry, that would not be the case. The number and spread of delegates for the Currency Conference, now just two weeks away, are also good.

These are not signs of an industry in trouble – but one that is investing for the future.

‘There are three kinds of lies: lies, damned lies, and statistics’ said Benjamin Disraeli, a British politician and twice the country’s prime minister in the 19^th century. The quote is often used, sometimes with justification.  However, while that statement may apply when politicians use statistics, we have no such inclination to deceive. Admittedly we have only looked for the positive – but that was the object of the exercise in a situation where the negative is all too apparent.

Crosshead: These are not signs of an industry in trouble – but one that is investing for the future