De La Rue keeps full-year guidance despite COVID-19

De La Rue is keeping its full-year operating profit guidance at its prior level of £20m-£25m, saying its too soon to gauge the impact of COVID-19 on its turnaround plans.

The profit forecast is well down on the £60m operating profit reported in the 2018/19 financial year, but on the plus side the revamp under new chief executive Clive Vacher has dramatically cut debt, from £171m at the half-year timepoint to around £105m.

Earlier this year, Vacher announced plans to cut costs by around £35m over three years, increasing an earlier target of £20m as it tries to breathe new life into its banknote operations and grow its emerging authentication business.

“The group is progressing well with its turnaround plan announced on 25 February,” said De La Rue in a statement to shareholders.

De La Rue went on to say it is “monitoring developments related to COVID-19, and actively taking steps to protect its employees in line with guidance from governments. At present, it is too early to quantify the potential impact on FY 2020/21.”

The company – which has issued a profit-warning, faced down an investor revolt last year and is under investigation by the Serious Fraud Office – said in December that it could be at risk of collapse if its turnaround plan doesn’t work as hoped.

The company was fined £300,000 earlier this month by the UK Health and Safety Executive after it pleaded guilty to breaching regulations in a case involving a worker at its Bathford Paper Mill who had to undergo facial reconstruction surgery after his head became trapped in a machine.

De la Rue sold the paper businesses at Overton Mill and Bathford Mill in 2018 as part of its shift in strategy away from paper and towards polymer banknotes.