Banknote printer De La Rue has revealed falling profits amid supply chain woes and warned of a hit to earnings over the year ahead as it faces another £5 million rise in costs.
Shares in the company – which prints banknotes for the Bank of England and other central banks across the globe – slumped as much as 10% as it said mounting inflation pressures are expected to leave underlying earnings “broadly flat” in its current financial year.
It came as the group posted a 4.5% fall in underlying operating profits to £36.4 million for the year to March 26, having issued an alert over earnings in January due to supply chain shortages and rising costs.
De La Rue said inflation has picked up further since the end of March and warned that the woes will hamper its turnaround plans.
Chief executive Clive Vacher said: “We have prudently revised our outlook for the financial year 2022/23 adjusted operating profit, due to further headwinds experienced since the end of our financial year, and a realistic expectation of how far we can mitigate them.
“While this means that our progress is slowed, we remain strongly on the right path strategically and operationally.”
The firm said earlier this year that, as well as supply chain disruption and shortages, it was also seeing steep rises in commodity prices for raw materials used in production, particularly on goods that can only be bought at so-called spot prices.
It saw underlying earnings in its currency and authentication division rise by 30.2% over the year to March – less than half the original growth target of 65%.
But the group insisted it is making progress on its overhaul, despite being held back by current pressures.
It stripped out £36 million of costs over the past year, though it revealed a £7 million impact from supply chain shortages and inflation.
Turnaround plans at the firm include putting more focus on printing money, capitalising on a trend of governments to shift towards polymer banknotes, and offering stronger security features.