De La Rue profits warning hits shares

De La Rue, the world's largest printer of banknotes, yesterday shocked the market with its second profits warning in two months and signalled it would cut nearly 350 jobs.

De La Rue, the world's largest printer of banknotes, yesterday shocked the market with its second profits warning in two months and signalled it would cut nearly 350 jobs.

Its shares spiralled down 21 per cent to 244p after it warned profits for the full-year would be "significantly" below last year's £90m as a result of delays in printing new banknotes and ongoing problems with its security products division, which puts holograms on credit cards and travellers' cheques.

The company said it would address problems at the loss-making security products area by closing a factory in High Wycombe, Buckinghamshire. Most of the 350 staff employed at the site will lose their jobs.

The group also announced the acquisition of the House of Questa, a UK-based high security printer, for £3.2m. De La Rue said some staff at High Wycombe would be transferred to the Questa business, which prints stamps and motor vehicle tax discs. De La Rue said it would take a one-off restructuring charge of £18m and hoped to make annual cost savings of £5m.

The company's shares, which fell 30 per cent after its first profits warning in July, were pummelled again as analysts concluded that the company had been too optimistic in the summer about prospects for the second half of the year.

At the time, De La Rue predicted a strong upturn in its cash systems business, where products include bank teller machines. The company said it expected the increase to make up for much of the slowing in the first half.

Yesterday it said: "While De La Rue expects the second half operating result to be comparable to the same period last year, the expected shortfall in the first half means that the operating result for the whole year will be significantly below last year."