UPDATE 2-De La Rue shares sink as passport maker warns on profit again

* Sees FY profit lower than market view

* Sees H1 profit in low-to-mid single digit millions

* Shares plunge to 21-year low (Adds shares, background, analyst comments)

By Yadarisa Shabong and Indranil Sarkar

Oct 30 (Reuters) - De La Rue shares plunged to their lowest in more than two decades on Wednesday after the British passport and banknotes printer cut its profit forecast for the second time in five months.

Analysts said the move by new chief executive Clive Vacher was aimed at resetting expectations as he sets out on reviving a business hit by weak profit margins and a fraud probe.

De La Rue, which prints around seven billion banknotes and 15 million passports a year, said it expected annual profit to be significantly lower than market expectations, with the first-half result likely to be in the low-to-mid single digit millions compared with 17 million pounds ($22 million) a year earlier.

The company did not specify the reason for the downgrade in its brief update and declined to comment further.

Its shares, listed on Britain's small-cap index, fell as much as 30% to a 21-year low of 131.6 pence.

De La Rue has had a series of setbacks this year, including a one-off hit for non-payment from Venezuela and a British investigation into suspected corruption in South Sudan. De La Rue has said it is cooperating with the probe.

"Into this scenario walks new chief executive Clive Vacher. He is an old hand at turnarounds and appears to be following the playbook – wasting very little time from his arrival at the start of the month to reset expectations," said Russ Mould, investment director at AJ Bell.

De La Rue had said in May that operating profit this year would be "somewhat lower" than last year, pointing to a margin squeeze from competitive pressures in banknote printing.

"It's clearly the problems from the outgoing leadership," CMC Markets analyst David Madden said.

The warning in May was followed by the company replacing Chief Executive Martin Sutherland with turnaround specialist Vacher in October, who faces an uphill task alongside new chairman Kevin Loosemore.

De La Rue's woes have been compounded by the loss of its 400 million pound contract to produce Britain's passports ahead of the country's planned exit from the European Union.

To offset weakness in its traditional businesses, De La Rue had been shifting to new areas, securing contracts with the UK tax authority and Saudi Arabia and focusing on its currency and authentication divisions.

($1 = 0.7763 pounds) (Reporting by Yadarisa Shabong and Indranil Sarkar in Bengaluru; Editing by Arun Koyyur and Mark Potter)