De La Rue: Struggling British banknote maker reassures market it’s on track to hit profit target

Struggling banknote maker De La Rue has tried to reassure the market that it’s on track to hit its profit target for the year after a string of profit warnings from the firm.

In a statement issued this morning, De La Rue said adjusted operating profit will be in line with previous guidance of £20m. Meanwhile, net debt is expected to be around £90m, which is “marginally better than previous guidance.”

The update followed what has been a tough period for the firm. Profit has plunged over the past three years as uncertainty has plagued its key banknote printing division, while sales in its authentication division have not made up for the decline.

Last year, the company informed markets that demand for banknotes had slumped to the lowest level in 20 years.

However, towards the end of last year, it looked like the group had started drawing a line under its problems. The firm achieved an adjusted operating profit of £7.9m in the first half of its financial year, ahead of previous guidance of breakeven.

While total revenue dipped 1.7 per cent, and its statutory loss before tax widened from £15.9m to £16.8m, the overall numbers were still a step in the right direction for a firm.

As its troubles have mounted, shares in De La Rue have slumped more than 80 per cent in the past five years.

Today’s trading update followed the news that Richard Griffiths, sometimes known as the ‘Welsh Wizard’ had increased his holdings in the firm to 10.19 per cent from 11.44 per cent.

De La Rue also announced at the beginning of April it had signed a five-year renewal of its contract for the supply of authentication services to Microsoft’s OEM, retail and Xbox channels.