De La Rue warns on full-year profit after restructuring charges

De La Rue, the currency maker, has warned that full-year profit would be below market expectations after falling to a loss in the first half.

The British banknote printer said on Wednesday that it now expected full-year adjusted operating profits to be between £30mn-£33mn, lower than analyst estimates of about £36mn, after booking a series of exceptional charges related to restructuring efforts.

De La Rue’s auditors warned of a “material uncertainty” about the company as a going concern. In the audit statement, EY said that, in a “severe but plausible downside scenario” where De La Rue lost key currency contracts, it would breach a debt covenant on the group’s credit facility.

Shares in the group shed a quarter of their value in early London trading, stretching their decline for the year to more than 50 per cent.

Revenues fell more than 8 per cent to £164.3mn after a drop in sales in its currency-making operations, which were hit by customers using up stocks built up over the pandemic when money use fell sharply.

De La Rue is in a public fight with one of its largest shareholders, the activist fund manager Crystal Amber, over its long-term strategy as it nears the end of a three-year turnround plan.

The group will aim for further “efficiency actions” and expects to save an annualised £12mn.

Clive Vacher, chief executive of De La Rue, said that the first half of the year had been challenging, “with a number of key headwinds” and restructuring costs.

He said that the company continued to face supply chain inflation, including higher prices for its polymer notes business. The company reported an operating loss of £12.6mn in the first half, compared with an operating profit of £13.8mn in the same period last year.

The company outlined a new plan for the next three years, saying that it expected to be free-cash flow generating, after pension payments, for the next financial year.

De La Rue has called a general meeting on December 2 to vote on the re-election of Kevin Loosemore, its chair, in response to a request by Crystal Amber for him to resign with immediate effect. The company has recommended shareholders support Loosemore.