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De La Rue warns jobs under threat after third profit alert this year

Banknote printer De La Rue has warned over possible job cuts as it looks to ramp up cost savings after swinging to a loss and warning over full-year results for the third time this year.

Chief executive Clive Vacher told the PA news agency that moves to strip out another £12 million in costs under an ongoing overhaul will impact its workforce.

He said it was too early to say how many roles would be impacted or give further details.

But he said the cost savings would be “global and right across the cost base”.

“It will have an effect on employment and that will, again, be on a global basis.”

Mr Vacher added that he would also look at “optimising” the group’s manufacturing sites further in the UK and worldwide, but stressed there were no immediate plans for closures, having already trimmed its banknote print locations from five down to four.

The group – which prints banknotes for the Bank of England and other central banks across the globe – slumped to a £15.9 million loss in the six months to September 24, against profits of £10.9 million a year earlier in results that come as it faces increasing pressure from activist shareholder Crystal Amber.

Its underlying earnings nearly halved to £9.3 million from £17.4 million a year ago and the group said it expects full-year adjusted earnings to slump to between £30 million to £33 million.

This is down from £36.4 million the previous year and lower than the £36 million it previously guided for.

It said the group’s currency division had been knocked by falling demand as governments use up the stocks of banknotes built up during the pandemic, while countries are also facing pressure on public finances caused by the cost-of-living crisis.

Mr Vacher is hopeful of a turnaround in the currency business as soaring inflation in the UK and globally drives greater need for more banknotes, given that each note buys less and therefore more notes are needed for each purchase.

“We are seeing encouraging signs that inflation is driving banknote demand in places. However, it is too soon to know if this is the start of a trend and we are therefore planning prudently in the short-term,” the group said.

But its half-year accounts revealed a “material uncertainty” warning that if key currency contracts are not won and alternatives not secured or costs trimmed, then it could breach its banking agreements and its ability to continue as a going concern.

Mr Vacher told PA that further cost cutting actions were needed in the next three-year leg of his overhaul to ensure the business can weather the currency wider economic storm even if the currency market does not recover.

“We’re not being complacent,” he said. “We’re now going even further in terms of productivity and efficiencies right across the board, because of the inflationary pressures we’re facing, as well as the rather dull market out there.”

The currency business saw underlying earnings plunge 47.6% to £4.3 million in the first half.

Crystal Amber, which has a 10% stake in the business, reiterated its call for De La Rue’s chairman Kevin Loosemore to resign ahead of a December 2 general meeting for shareholders to vote on the proposal.

Crystal Amber’s fund manager and investment adviser Ricard Bernstein wrote on Twitter that De La Rue’s chairman “needs to go now”.

He said: “Management fails to take responsibility. Instead blaming Crystal Amber ‘distraction’ for articulating shortcomings. Staff and shareholders are the losers here.”

Mr Vacher said Mr Loosemore was voted to remain in place at its annual shareholder meeting just four months ago.

“We are surprised by the stance that Crystal Amber has taken. I believe that we will create the growth and value for shareholders by continuing with the strategy,” he said.