Bank of England banknote printer issues profit warning

The banknote printer used by the Bank of England has issued a profit warning after trading conditions "deteriorated".

De La Rue, which prints banknotes for a number of countries around the world as well as making the UK's biometric passports, had reported a shift in the markets that forced it to revise its profits for the year. The company now expects profits to be £20 million lower than those reported in 2013/14 while its share prices dropped 22 per cent in early morning trading following the announcement.

The company's profit warning wiped £180 million off the value of the FTSE 250-listed business as investors cashed out. De La Rue added that price and margins for its printing services and secure paper used for banknotes would be lower than previously expected. The take up of new business had been slow with the transition to making biometric passports for the UK government described as "disappointing".

Philip Rogerson, De La Rue chairman, said: "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 research and development for the future."

De La Rue has a license to print money, but generating its own revenue and profits has been a growing problem for the company. In 2012, the firm announced a halving of annual profits as it continued to invest in restructuring following production issues 12 months earlier.

The company's fortunes have not been totally turned around and it still finds itself struggling to maintain high levels of profit. The latest announcement falls below the previously forecast operating profits of £90 million for 2014/15, rising to £94 million in 2015/16. These have now been downgraded to £68 million and £58 million respectively.

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