Shares in banknote designer and printer De La Rue (DLAR) crashed 26% to a 10-year low of 138p after it warned that operating profits for the full year to 30 March 2020 would be ‘significantly lower than market expectations’.

The consensus forecast for operating profits for the 12 months has been cut to £53.4m, implying an 11% fall on last year's £60.1m.

Operating profits for the first half to 28 September were in the ‘low-to-mid single digits’ in millions of pounds, according to the company, against £10m the previous year.


De La Rue prints roughly a third of the world’s banknotes but it has faced significant headwinds in recent years. This was exacerbated in the summer just gone by an investigation from the Serious Fraud Office into its dealings in South Sudan.

De La Rue shares have lost almost 90% of their value since 2012 highs of £10.69.

New chief executive Clive Vacher, who took over the role at the start of this month, has wasted no time in re-setting expectations as he undertakes a ‘detailed review’ of the business.


Previous chief executive Martin Sutherland had boasted in the full year results statement in May that his strategic review of the identity business was ‘making good progress’, while promising a three-year programme of cost cuts to help the banknote printing unit cope with the ‘significant challenges’ facing it.

Following the results, De La Rue sold its international ‘identity solutions’ business to HID Global for £42m with an agreement to provide printing services to HID until 2022.

However the contract to continue printing UK passports was excluded from the deal.

Clearly, despite the cost-cutting plan and assurances from the board at the July annual general meeting (AGM) that profits for the full year were on track to meet expectations, business conditions have deteriorated considerably if earnings are set to miss already-lowered forecasts by such a significant margin.


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Issue Date: 30 Oct 2019