The British currency maker De La Rue has warned that its profits next year would be affected by rising supply costs, sending its shares down sharply on Wednesday.
The UK-based banknote company said “new headwinds” would reduce adjusted operating profits for 2023. It added that there was now a “substantial degree of uncertainty in the outlook” with inflation in the chain. supply was expected to increase operating costs by £. 5mn.
“There is a possibility that the disruption will affect revenue,” he added. “The board now expects the full-year adjusted operating profit for 2023 to be virtually constant compared to the full year 2022 and weighted towards the second half.”
Shares of the group fell 8% in early London trading to 102p, bringing its year-on-year decline to almost 35%. De La Rue’s supply chain includes chips used in passports from countries such as Australia, which have been affected by the global disruption. It also faces rising raw material costs, such as polymer sheets and chemicals used to make banknotes.
De La Rue said it was moving forward with its change strategy, which includes reducing costs and streamlining operations. The company has improved its market position through commercial divisions, he added.
“We have carefully reviewed our outlook for adjusted operating profit for fiscal year 2022/23, due to the new headwinds experienced since the end of our fiscal year, and a realistic expectation of the extent to which we can mitigate them.” said CEO Clive Vacher.
He added that while progress has been slow, “we are firmly on the right path strategically and operationally to build a strong, cash-generating business in the medium term.”
The company was forced in March to admit that a change plan initiated by a new management would take longer than expected after it failed to have analysts’ forecasts of this year’s operating profit.
The company reported an adjusted operating profit of £ 36.4 million in the 12 months to the end of March, down from 38.1 million last year, with revenues falling to £ 375.1 million. from 397.4 million.