(Bloomberg) — De La Rue Plc shares plunged as the British maker of bank notes warned that rising costs would hit its earnings.
The stock dropped as much as 31% after the Basingstoke, England-based company said in a statement that staff absenteeism caused by the latest Covid-19 variants had reduced its output, while it has also been affected by supply chain shortages in chips and raw materials.
“Significant headwinds, primarily relating to the Covid-19 pandemic, have become more pronounced,” the company said. De La Rue said the issues would also cause a 12-month delay to results from a turnaround plan announced in 2020 following two years of outsized share-price slumps.
De La Rue has suffered from a spike in the cost of chemicals used to print bank notes, while chips are needed to make biometric passports, Chief Executive Clive Vacher said in an interview. “Nobody knows when the supply chain situation is going to normalize,” he said.
The company, with a history dating back to 1813, now expects full-year adjusted operating profit of between 36 million pounds and 40 million pounds ($49 million to $54 million), compared with market expectations of 45 million pounds to 47 million pounds, it said. The firm said it’s “intensifying” efforts to mitigate rising costs.
De La Rue said in its statement that the currency unit continues to see growth as countries convert to polymer notes, while the authentication business is experiencing increasing demand from governments and corporations.
“This is not a case of problems with the underlying turnaround plan or its execution,” said Vacher. “That is all traveling well.”
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