Banknote printer warns of profits slump as trading conditions deteriorate

De La Rue's plant in Basingstoke
De La Rue's plant in Basingstoke
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De La Rue, which prints notes for the Bank of England, has warned that profits will slump by £20m due to deteriorating trading conditions.

The firm said its currency division has been impacted by lower prices and reduced margins, while demand from overseas customers for biometric passports has also been disappointing.

De La Rue’s shares lost more than a fifth of their value following the profit warning. The company warned that the tough trading conditions were likely to continue into 2015/16. It also said it was putting the size of its full-year dividend payment to shareholders under review.

The printer warned last year that tough competition was driving down banknote prices.

It added that this trend was continuing, with recent orders being good in respect of volumes but disappointing in terms of pricing.

The company has produced bank notes since 1860 and was recently selected by the Bank of England as its preferred bidder to print the country’s first plastic banknotes. De La Rue has printed notes at the Bank’s plant in Debden, Essex, since 2003 under a contract due to end in April, but which is now likely to be extended by another 10 years.

The FTSE 250 company recently ended its seven-month search for a chief executive by appointing Martin Sutherland, managing director of BAE Systems’ cyber business. He joins the firm on October 13.

De La Rue said profits for the year to March 31 were likely to be about £20m lower than the £77.3m reported for last year.

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.”