De La Rue to cut 400 jobs

De La Rue, one of the world's largest banknote printing groups, yesterday moved to slash costs in its main security printing arm with a restructuring programme involving the loss of a possible 400 jobs, a quarter of the division's workforce.

The announcement is the company's latest response to increasing international competition in the congested banknote and cheque-printing market, where profit margins have plunged over the past two years.

The news provided some welcome relief for long-suffering investors who have seen the value of De La Rue shares halve since 1995 after the company made three profits warnings in 15 months. The problems also stemmed from the pounds 680m takeover of banknote paper maker Portals, a deal widely considered by analysts to be overpriced. Shares in the group recovered 29.5p to 558.5p yesterday, though they remain far off their peak of pounds 10.50.

The reorganisation will concentrate manufacturing on three of De La Rue's four security printing sites in the UK following its purchase of Lonrho's postage stamp printing business, Harrison & Sons, in February. Factories will move from combining several different product lines to fewer tasks. The group's plant at High Wycombe, which De La Rue inherited from Lonrho, is to be refurbished while its Dunstable site will close. Banknote production will move from High Wycombe to Gateshead, while travellers' cheque making will switch to High Wycombe.

The company said the cuts would take place over six months and would cost pounds 15m. Alan Blundell, director of the security print operation, said the move represented "decisive action".

Representatives from the printing workers' union, the GPMU, are to be consulted about the job losses, which come out the security printing division's workforce of 1,685.