De La Rue Share News (DLAR)

(Sharecast News) - Shares of De La Rue tumbled on Wednesday as the banknote printer warned on profits.
The company, which lost out on the government's £490m contract to print the post-Brexit blue passports, said adjusted operating profits for the half year ended 28 September will be low-to-mid single digit millions and full-year 2019/20 adjusted operating profit will be "significantly" lower than market expectations.

"Management, led by the new CEO, is conducting a detailed review of the business and will update the market further when it reports its H1 2019/20 results on 26 November 2019," it said.

De La Rue had already warned in May that FY20 operating profit would be "somewhat lower" than the current year.

At 0910 GMT, the shares were down 21% at 147.87p.

Russ Mould, investment director at AJ Bell, said: "De La Rue fails a major test for investors: if it didn't exist as a business today, would you really set it up? Being a specialist banknote printer looks anachronistic in an increasingly cashless world.

"Add into the mix the loss of the contract to print British passports, an unpaid debt owed to it by the Venezuelan central bank, a fraud investigation into corruption in South Sudan as well as increasing pressure from activist shareholder Crystal Amber and it is little surprise the company has resorted to a change of management in a desperate attempt to revive its fortunes.

"Into this scenario walks new chief executive Clive Vacher. He is an old hand at turnarounds and appears to be following the playbook - wasting very little time from his arrival at the start of the month to reset expectations.

"Investors might be slightly concerned that no reason is given for today's profit warning, the second in a little over six months.

"A 'detailed review' of the business implies some significant restructuring and even that some bits of the group might be sold off.

"It is worth noting that De La Rue has been through a similar process in the past under another corporate Mr Fixit in Leo Quinn. He led a successful turnaround of the group albeit one that wasn't long-lasting. Vacher's task could be significantly harder now."

Edison said: "With no detail on the factors driving the weak performance, we are placing our forecasts under review pending H120 results on 26 November.

"With the arrival earlier this month of the new CEO, Clive Vacher, management is undertaking a detailed review of the business and we expect to hear at least initial thoughts on this with the H120 results. A full reset of the strategy may take more time but, given the reduced earnings capacity of both currency and ID solutions, the supportive dividend may be the first casualty."