De La Rue pledges ‘urgent actions’ under turnaround after first half loss
The new boss of passport and banknote firm De La Rue has said he is taking “urgent actions” under a turnaround plan as the group revealed it slumped to a half-year loss.
De La Rue – which had warned over profits twice in recent months – posted a £12.1 million pre-tax loss for the six months to September 28 against profits of £7.1 million a year earlier.
Underlying operating profits crashed 87.1% to £2.2 million over the first half.
Chief executive Clive Vacher said the group had been hit by a raft of management changes and an increasingly competitive banknote printing market.
He is ramping up cost-cutting as a result and restructured the group into two divisions – authentication and currency – earlier this month to lead a recovery, with a “full review” being conducted by the end of next March.
De La Rue has also halted shareholder dividend payments.
But it is expecting a better second-half performance as cost savings come through and improved trading in its currency arm.
The group is forecasting underlying operating profits of between £20 million and £25 million for the full-year.
Mr Vacher said: “The business has experienced an unprecedented period of change with the chairman, CEO, senior independent director and most of the executive team leaving or resigning in the period.”
He said it will “take some time” to get the management team on a steady footing.
But he added: “In the meantime, we have already identified and started to implement the urgent actions needed to stabilise the business and allow us to complete the review.”
It comes after De La Rue alerted over half-year profits last month.
The company suffered heavily from losing out on the Government’s contract to make new blue UK passports.
Turnaround specialist Mr Vacher replaced Martin Sutherland, who quit in May following a previous profit warning.
Mr Vacher’s turnaround will also have to contend with a Serious Fraud Office investigation into alleged corruption at its South Sudan business.
There is also an £18 million black hole in the accounts after the company revealed in May that the Venezuelan central bank has been struggling to pay its bills.
De La Rue manufactures about a third of the world’s banknotes and employs more than 2,500 people.
But last year it lost the contract to print British passports to a French company which led to activist investors calling for a major overhaul of the business.
The pressure resulted in non-executive resignations, including chairman Philip Rogerson, who stood down to be replaced by Kevin Loosemore.