Shares in De La Rue, the company responsible for printing banknotes in England, have plunged following a profits warning.
Profits for this year are now expected to be 20m lower than in 2013/14, and the company has cut its dividend.
On Friday its shares were trading down around 30%, wiping 223m off the company’s stock market value.
De La Rue is involved in making banknotes for more than 150 countries, and passports or identity systems for over 65 governments.
A company statement read: “The Board expects that for the current year both underlying operating profit and underlying profit before tax will be approximately 20m lower than that reported for 2013/14 (2013/14 underlying operating profit 89.3m, underlying profit before tax 77.3m).”
Prices and margins for its printing services and secure paper used for banknotes were being squeezed.
De La Rue won a 10-year contract to print Bank of England notes, which includes printing the next generation of plastic banknotes.
Analysts have speculated that the Bank of England had pushed hard for a lower price in the deal, and warned that other central banks it does business with may follow suit – squeezing margins further.
It also said trends towards “e” passports from machine readable passports has been disappointing, and lost out in a number of prospective orders in as they were extended with the incumbent supplier.
The company’s board said it was now reappraising the level of the dividend “in light of this more difficult trading environment”.
It expects to announce an interim dividend of 8.3 pence per share in November. Analysts had expected about 14.1 pence.
Philip Rogerson, De La Rue chairman, said: “While disappointing to announce this trading update De La Rue, as the market leading banknote printer, remains a strong, profitable and cash generative business. We will continue to pursue efficiency gains, invest in the business and in R&D for the future.”
