De La Rue warns on profits, shares tumble

De La Rue warned over full-year profits on Monday, pinning the blame on Covid-related disruptions and supply chain issues, sending shares in the banknote printer tumbling.

In an update for the year ending 26 March, the company said that since its half-year results - during which it highlighted increased commodity and energy costs and supply chain challenges - headwinds relating to the pandemic have become more pronounced.

"The Omicron and Delta variants have caused substantially increased employee absences in our manufacturing facilities globally, which will result in lower total operational output for the full year," it said. "More recently, the group has also been affected by supply chain shortages in chips and other process raw materials and has experienced a degree of supply chain cost inflation."

As a result, it now expects adjusted operating profit for the full year to be broadly similar to the prior year, between £36m and £40m and below market expectations of around £45m to £47m.

De La Rue said Omicron and supply chain issues will delay the results of its turnaround plan by 12 months.

Chief executive officer Clive Vacher said: "Despite the macro challenges that are delaying aspects of the Turnaround Plan, De La Rue continues to increase adjusted operating profit in both divisions year on year, and the Plan anticipates this to continue going forward.

"While this trading update is disappointing, it should be seen as a delay to reaching our Turnaround Plan objectives, rather than indicating that a change of direction is required. The company's leadership has worked hard to mitigate many of these external effects, with the cost reduction activities we have implemented since early 2020 having a significant impact in supporting our underlying performance while we navigate these external factors."

At 0817 GMT, the shares were down 27.7% at 108.40p.