Profits fall as bank note firm hit by weak euro

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The company that prints notes for the Bank of England has reported a sharp drop in annual profits due to challenging market conditions and price pressures.

De La Rue, which also makes passports and tax stamps, said underlying pre-tax profits slumped by a quarter to £57.7m after it also new business slowed at its security products unit.

Shares at the FTSE 250 company tumbled nine per cent after its full-year results, as De La Rue cautioned of an ongoing hit from the weak euro, which is boosting its European competitors.

Its 12-month order book at the end of the period was almost 21 per cent lower at £243m, reflecting tough trading ahead.

The business, which has produced bank notes since 1860, has one of its key contracts with the Bank of England. It signed a new 10-year deal with the central bank in October that will see it print plastic banknotes from 2016.

De La Rue had already warned that full-year profits would be lower, with shares losing more than a fifth of their value following the alert last September.

The company had cautioned the tough trading conditions were likely to continue into the 2015/16 financial year.

Difficult market conditions have continued into the new financial year, the group added.

The firm slashed its total dividend by 40 per cent to 25p “in light of the difficult trading environment”.

De La Rue ended its seven-month search for a chief executive in October, appointing Martin Sutherland, former managing director of BAE Systems’ cyber business, to lead a turnaround.

Yesterday, Mr Sutherland said the group would invest in plastic banknote development, security products and passports to develop a wider spread of customers and give high quality earnings.

However, brokers at Investec said: “The cautious outlook does not give us any comfort that the headwinds, especially in currency are easing.”