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Business

De La Rue future at risk

Security printing firm, De La Rue has revealed that its future may be at risk if a “comprehensive turnaround plan” fails.

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De La Rue has revealed its future may be at risk

The firm was recently dealt a blow when it lost the post-Brexit UK passport printing contract to a French-Dutch firm. As a result, its Gateshead plant experienced job losses this summer.

In the company’s 2019/20 half year report, De La Rue reveals a financial loss of 14.9% as it drops from an adjusted revenue of £242m in 2018/19 to £205.9m in the same period for 2019/20. The firm lists a decline in currency volumes and average price as contributors to the decline. 

Following a period of “significant management change and instability” De La Rue has taken the decision to suspend future dividend payments in a bid to manage its net debt levels in response to “identified material uncertainty”.

Clive Vacher, chief executive officer of the firm describes how the company has experienced “an unprecedented period of change” following the departure of its former chief executive officer, chairman, senior independent director and “most of the executive team”.

The potentially precarious future of De La Rue, a major UK manufacturing company, should be ringing alarm bells across government

He says the departures have caused inconsistency in both quality and speed of execution at the firm, but he assures that the new board is working to stabilise this.

Vacher continues: “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.”

On a more positive note, Vacher adds that De La Rue’s Authentication business has continued to grow, providing some balance against the currency “headwinds”. He also describes demand for polymer substrate as having exceeded expectations.

Looking forward, the company is preparing to make structural changes and is designing what Vacher describes as “a comprehensive turnaround plan”.

The company is devising a “comprehensive turnaround plan” to prevent its collapse

“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,” he concludes.

As a result of the De La Rue’s latest figures, shares in the company have already fallen by 20%.

Unite the Union, which has 250 members at the Gateshead site and 150 at the Debden, Essex site, has described the company’s risk of collapsing as “very worrying”.

Louisa Bull, Unite national officer says: “The potentially precarious future of De La Rue, a major UK manufacturing company, should be ringing alarm bells across government. Unite will be doing all it can in supporting our members at this very difficult time and will continue to campaign strongly to keep vital printing work in the UK.

“We have previously criticised the government’s short-sighted and blinkered decision to award the printing of post-Brexit UK passports, worth £490m to French-Dutch firm Gemalto as it seriously undermined the financial viability of the Gateshead operation.”

If you have any news, please email carys@linkpublishing.co.uk or join in with the conversation on Twitter and LinkedIn.


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