De La Rue warns of losing top customer

City A.M. Reporter
BANKNOTE printer De La Rue today said its production problems could lead to the loss of a top customer, knocking its shares to a four-year low.

Executive chairman Nicholas Brookes told Reuters that doubt lingered over De La Rue's relationship with the customer for whom the faulty banknote paper was originally produced.

"There is still uncertainty with a principal customer and we have not heard whether we will continue or not continue supplying this customer," Brookes said, adding that the client in question is one of De La Rue's largest.

Newspapers have reported the faulty paper was destined for India, one of the company's largest clients. The Reserve Bank of India has declined to comment.

De La Rue shares, which have lost more than 30 per cent of their value since the company first reported problems at its paper factory in July, had fallen nine per cent at 1026 GMT to 568p, after earlier touching their lowest price in four years.

De La Rue said its profit more than halved in the first half of 2010, following a £35m hit caused by the suspension of production at one of its plants.

The costs were in line with a September profit warning and the company said it would resolve the production issue through management appointments, a focus on paper quality and engaging its customers.

First-half revenue was down 17 per cent at £209.2m and profit before tax and exceptional items was £23.8m, down from £48m in the same period last year.

De La Rue maintained its interim dividend at 14.1p.