De La Rue sees profits hit by poor start to the year in currency arm

Passport and banknote-maker De La Rue has said it expects a large drop in profit during the financial year that just ended, after struggles in its currency arm.

The company predicted that adjusted operating profit for the 12 months ending March 27 would be between £20 million and £25 million, in line with earlier guidance.

However, this is a major drop on the previous year, when adjusted operating profit reached more than £60 million.

The fall is largely due to business drying up in its currency arm in the first half of the financial year. De La Rue said last month that trading has been “satisfactory” in more recent months.

De La Rue’s 2,500 employees make the Bank of England’s new plastic notes, along with around a third of the world’s banknotes.

It marks the end of a tough year for the passport-maker, forcing it to embark on a turnaround plan, cutting costs and improving efficiencies.

In February, De La Rue’s new boss, Clive Vacher, said he plans to cut costs by around £35 million over three years. The previous target had been to cut £20 million from the company’s expenditure.

On Tuesday, the business said net debt at the end of the financial year is expected to be £105 million, a reduction of more than £65 million from six months ago.

“The group is progressing well with its turnaround plan announced on 25 February,” De La Rue said in a statement to shareholders.

“The company is monitoring developments related to Covid-19, and actively taking steps to protect its employees in line with guidance from governments.

“At present, it is too early to quantify the potential impact on the 2020-2021 financial year.”