CEO Clive Vacher announces 'turn around' plan as shares plummet
Banknote print firm De La Rue fears for its future.
The firm that prints bank notes for Britain and many other countries is in financial trouble. De La Rue’s shares fell badly after the boss Clive Vacher admitted they had registered a loss of £9.2m in the first six months of this year and scrapped its dividend.
Even more news was the net debt of the Essex based security printing company rose 58% to £170.7m. Jo Francis writing in Print Week said: “The group has scrapped its dividend and admitted that it could breach its banking covenants if trading conditions continue to deteriorate and it fails to boost profitability in areas targeted for growth. It filed a ‘material uncertainty’ over its ability to continue as a going concern as a result. De La Rue shares fell by 25% to a new ten-year low of 131.40p after the half-year results announcement.”
Ian Carrotte of ICSM Credit said the news sends shock waves through the industry as once again big names are not immune from insolvency. He said: “Astonishingly there is no competitor for their work in this country so they have cornered the market so something has gone wrong. Clive Vacher was brought in this autumn to turn things around – so it will be interesting to see how he manages it as insolvency would be unthinkable.”
Clive Vacher CEO of De La Rue, said: “The business has experienced an unprecedented period of change with the Chairman, CEO, senior independent director and most of the executive team leaving or resigning in the period. This has led to inconsistency in both quality and speed of execution. The new Board is working to stabilise the management team, which we believe will take some time.
“At the same time, we have seen significant changes since the start of the year in the market for Currency, including pricing pressure as a result of reduced overspill demand. This has had a material impact on volumes and profitability in H1 2019/20 and it will also take time for the currency market to normalise. Our Authentication business continues to show good growth and provides some degree of balance to the Currency headwinds, while demand for polymer substrate is also exceeding our expectations.
“In response, we are reviewing our cost base and will make the structural changes that will further strengthen our competitiveness in a challenging market. We continue to focus on building momentum in the higher-margin security feature market and continue to innovate to improve our position in this fast-growing area.
“Between now and the end of calendar Q1 2020, we will complete a full review of the business and design a comprehensive turnaround plan for the Company. In the meantime, we have already identified and started to implement the urgent actions needed to stabilise the business and allow us to complete the review. With strong emphasis on cost control and cash management, coupled with a focus on innovation and reversing the revenue decline, we will become a leaner, more efficient Company and drive shareholder value.”
The firm has already slashed 170 jobs at their Gateshead plant when it moved a print line in June to Malta following the Government awarding a £490m deal to Franco-Dutch firm Gemalto to make UK passports following Brexit.
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