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De La Rue banknote printer in profits warning De La Rue banknote printer in profits warning
(35 minutes later)
The company responsible for printing Bank of England banknotes has issued a profits warning.The company responsible for printing Bank of England banknotes has issued a profits warning.
De La Rue, which prints banknotes for several countries and also makes the UK's biometric passports, warning that trading conditions had "deteriorated" across the group.De La Rue, which prints banknotes for several countries and also makes the UK's biometric passports, warning that trading conditions had "deteriorated" across the group.
Profits for this year are now expected to be £20m lower than those reported in 2013/14.Profits for this year are now expected to be £20m lower than those reported in 2013/14.
The company said rates of growth in new business had been slower than expected. Shares in the company fell 22% in the first few minutes of trading.
"While disappointing to announce this trading update De La Rue, as the market leading banknote printer, remains a strong, profitable and cash generative business. We will continue to pursue efficiency gains, invest in the business and in R&D for the future," said De La Rue chairman Philip Rogerson. De La Rue said prices and margins for its printing services and secure paper used for banknotes were lower.
The company said it expects "the current difficult market conditions" to continue into the next financial year. It also said rates of growth in new business had been slower than expected in recent months, and said the transition to biometric passports, which it also makes for the UK government, had been "disappointing".
Earlier this month the company was named as the preferred bidder for a new 10-year deal to print Bank of England notes, but the value of the contract is expected to be lower than first thought, De La Rue said.
Plastic banknotes
Margins are also expected to be lower on the Bank's next generation of plastic banknotes.
De La Rue said it expects "the current difficult market conditions" to continue into the next financial year.
Operating profits last year were £89.3m.Operating profits last year were £89.3m.
Analysts had previously forecast operating profits of £90m this year and £94m in 2015/16, but have now downgraded their expectations to £68m and £58m respectively.Analysts had previously forecast operating profits of £90m this year and £94m in 2015/16, but have now downgraded their expectations to £68m and £58m respectively.
The company's board said it was now reappraising the level of the dividend "in light of this more difficult trading environment".The company's board said it was now reappraising the level of the dividend "in light of this more difficult trading environment".
It expects to announce an interim dividend of 8.3 pence per share in November. Analysts had expected about 14.1 pence.It expects to announce an interim dividend of 8.3 pence per share in November. Analysts had expected about 14.1 pence.
"While disappointing to announce this trading update De La Rue, as the market leading banknote printer, remains a strong, profitable and cash generative business. We will continue to pursue efficiency gains, invest in the business and in R&D for the future," said De La Rue chairman Philip Rogerson.