Banknote maker De La Rue in Covid-19 profit warning; markets on edge – business live | Business | The Guardian

British banknote printer De La Rue has issued a profit warning, after suffering supply chain shortages and staff absences due to the pandemic.

De La Rue told the City that annual profit will miss market expectations, after “significant headwinds”, primarily due to the Covid-19 pandemic, become more pronounced.

Those headwinds include increased employee absences at its manufacturing facilities globally due to coronavirus infections.

De La Rue says:

The Omicron and Delta variants have caused substantially increased employee absences in our manufacturing facilities globally, which will result in lower total operational output for the full year.

It has also suffered supply chain shortages, including semiconductors, and other process raw materials, plus rising costs due to supply chain cost inflation.

De La Rue now expects to make adjusted operating profits of £36m to £40m this financial year (to March 26th), missing market expectations of £45m-47m.

This disruption will delay the results of its Turnaround Plan by 12 months, De La Rue says, rather than derailing it.

Clive Vacher, CEO, says:

“Despite the macro challenges that are delaying aspects of the Turnaround Plan, De La Rue continues to increase adjusted operating profit in both divisions year on year, and the Plan anticipates this to continue going forward. While this trading update is disappointing, it should be seen as a delay to reaching our Turnaround Plan objectives, rather than indicating that a change of direction is required.

The Company’s leadership has worked hard to mitigate many of these external effects, with the cost reduction activities we have implemented since early 2020 having a significant impact in supporting our underlying performance while we navigate these external factors. The markets in which we operate, and our position in them, remain strong, and we continue to execute substantial investment for the future.”