UPDATE 2-De La Rue shares drop 30% on turnaround delay as COVID woes worsen

* Sees FY adj. operating profit between 36 mln-40 mln stg

* Analysts had expected profit of 45 mln-47 mln stg

* Sees lower total operational output for the year

* Shares slump 30% - hits lowest level since June 2020
(Adds detail, shares, CEO comments)

By Yadarisa Shabong

Jan 24 (Reuters) - De La Rue has delayed the
delivery of its turnaround plan by a year and warned that annual
profit will miss market expectations, as the banknote printer
struggles with coronavirus-related staff absences and supply
chain issues.

Shares in the London-listed company tumbled 30% as it said
staff shortages, supply snags and cost inflation have got worse,
hitting its higher cost sites in Britain and Malta, and lowering
its total output for the year.

De La Rue launched a three-year turnaround plan in Feb. 2020
after warning on its future and scrapping dividends to tackle
mounting debt following a series of setbacks including the loss
of a major contract for British passports.

CEO Clive Vacher told Reuters that the external factors,
which were not present when the company put the plan together,
had intensified and so profits would not grow as fast as the
group originally expected.

The turnaround plan entails cost reductions and investments
in polymer notes and in its authentication business, while
growing revenue and margins.

"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,"
Vacher said.

He said the company was tightly managing cashflow and
working capital and still aimed to pay a dividend in the next
financial year.

The company said it was cutting more costs to deal with the
pressures and it forecast adjusted operating profit to be in the
range of 36 million to 40 million pounds ($48.73 million-$54.15
million) versus market expectations of 45 million to 47 million
pounds for the year ending March.

De La Rue, which also has a contract to supply polycarbonate
datapages for the next generation Australian passport, said it
had also been hit by a shortage in chips, which are embedded in
pages it supplies to Note Printing Australia, part of the
Reserve Bank of Australia.

($1 = 0.7387 pounds)
(Reporting by Yadarisa Shabong in Bengaluru; Editing by
Subhranshu Sahu and Jane Merriman)