De La Rue issues profit warning
After the world’s largest commercial banknote printer De La Rue plc issued a profit warning, its shares took a -26% nosedive on the London Stock Exchange on Friday. The company blames lower prices and margins for its printing services and secure paper used for making banknotes.
De La Rue added that it plans to reappraise the level of its dividend for the full year, which will be announced on November 25. For the six-month period ending September 27, there will be an interim dividend of 8.3p per share, compared to 14.1p for the same period last year.
In a Trading Update issued on Friday, De La Rue wrote:
“Trading conditions across the Group have deteriorated such that expectations for the current and next financial year are now lower.”
Apart of printing banknotes in more than 150 national currencies, De La Rue plc also makes passports, postage stamps, bank checks, driving licenses, traveler’s checks, tax stamps, vouchers and passports.
De La Rue was founded by Thomas de la Rue in 1821.
The Basingstoke-based company says profit for this year is likely to be about ₤20 million ($32.6 million) lower than last year.
Apart from margins being squeezed, De La Rue says new business in recent months has slowed down considerably.
The company makes the UK biometric passport. Global uptake for the new type of passport has been “disappointing”, it added.
Within its Currency division, recent orders have been strong in respect to volumes but low in respect of pricing, the company explained. “The challenging market conditions reported at the AGM have deteriorated further with lower prices and reduced margins in both banknote print and paper.”
De La Rue Chairman, Philip Rogerson, said:
“While disappointing to announce this trading update De La Rue, as the market leading banknote printer, remains a strong, profitable and cash generative business. We will continue to pursue efficiency gains, invest in the business and in R&D for the future.”
Earlier in September, the Bank of England announced it had awarded the banknote printing contract to De La Rue as a “preferred bidder to makes the new polymer and paper money.