More than a fifth was wiped off the value of De La Rue, the banknote printer, following a second profit warning this year as its new chief executive announced a review of the business.
The latest setback follows the high profile loss of the contract to print British passports to a French company early last year. In July, the Serious Fraud Office opened an investigation into the group over suspected corruption in South Sudan, while, in May, De La Rue revealed an £18m hit after the Venezuelan central bank failed to pay its bills.
De La Rue warned on Thursday that full-year profits would be “significantly lower” than expectations. The group was also forced to warn over its outlook in May, saying that profits would be hit by heightened competition.
The company has brought in a new chairman and chief executive in recent months in an effort to get back on track. De La Rue’s share price has fallen four-fifths since the start of 2018 to a 21-year low, and dropped 20 .1 per cent on Wednesday to 149.51p.
Turnround specialist Clive Vacher was appointed as chief executive earlier this month to replace Martin Sutherland, who had been the focus of shareholder anger over high pay and poor performance. Crystal Amber, the activist shareholder with about 6 per cent of the stock, had called for the management to be ousted.
The new management, headed by chairman and former Micro Focus executive Kevin Loosemore, has met shareholders in recent weeks. De La Rue said on Wednesday that the team, under Mr Vacher, was conducting a “detailed review of the business” and would update the market when it reported its first-half results on November 26.
Analysts at CMC Markets said that the announcement appeared “to be drawing a line under the incidents that happened before his watch”, adding: “It is a tough tactic, but it is about starting afresh.”
The group said on Wednesday that operating profit for the six months to the end of September would be in the “low-to-mid single-digit millions” and that full-year profit would consequently be well below what the market had expected.
De La Rue, which has been making banknotes since 1860, employs more than 2,500 people. Before Wednesday’s warning, analyst estimates compiled by Factset had pointed to operating profit of £53.2m and pre-tax profit of £45.7m in the year to March 2020.
In the past financial year the group reported adjusted operating profit of £60.1m and had anticipated this figure would be “somewhat lower” in the current year amid rising competition in banknote printing.
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