Shares in De La Rue (DLAR) fell by more than a fifth after the group revealed that full-year adjusted operating profit would be “significantly lower” than market expectations. The announcement comes less than six months after the banknote printer warned that profits for 2020 would be “somewhat lower” than the £60.1m it recorded in 2019.
Management expects adjusted operating profit in the first half of its 2020 financial year to be in the “low-to-mid single digit millions”, below the £17m reported in the first six months of FY2019. The warning marks the first setback for freshly appointed chief executive Clive Vacher who only came into post at the beginning of October. Drafted in for his “business transformation” skills, Mr Vacher's arrival marked the end of a very public battle with activist investor Crystal Amber Fund over the successors to the Philip Rogerson/Martin Sutherland era – De La Rue’s previous chairman and chief executive. Mr Vacher will be leading a “detailed review” of operations, with an update promised alongside interim results on 26 November. The group is currently being reorganised into two divisions – currency and authentication – which it believes will enhance strategic focus and generate greater efficiencies.
It has been a dire year for De La Rue and any investors who have clung on – shares are now down almost two-thirds since the beginning of the year. Full-year results in May saw statutory pre-tax profits nosedive by 78 per cent to just £26m, with an £18m write-off of outstanding balances from the Venezuelan central bank. That was followed by the announcement of a Serious Fraud Office investigation into suspected corruption at the group’s South Sudan business. In October the group sold the international identity solutions business, which should help bolster the balance sheet as net debt more than doubled last year to £108m.
