De La Rue shares plunge as its posts drop in profit and cuts dividend

27th May 2015 07:18

Shares in banknote printer De La Rue plummeted 9% on Wednesday after the company said pre-tax profit dropped by a third to £38.9m for fiscal 2015, and posted a cut in the dividend to 25p per share from 42.3p.Underling profit before tax, which excluded items, came in at £57.7m from £77.3m a year ago, while profit attributable to equity holders was £34.3m or 33.4p per share, compared with £47.3m or 47p per share a year ago.Revenue fell to £472.1m from £513.3m last year, impacted by a difficult market environment in Currency, Identity Systems and Security products.Chief executive Martin Sutherland said: "These results are in line with our revised expectations and include the benefit of further operational efficiencies. However, these have been outweighed by the impact of the challenging market conditions on revenue and operating profit across the group.""As anticipated in September 2014, the difficult market conditions have continued into the new financial year. More recently however, the weakness of the euro against sterling has given the euro zone suppliers a commercial advantage putting some further pressure on the Group's profitability."Investec Securities cut its rating on the stock to 'hold' from 'add' following the results and downgraded its target price to 540p from 560p, pointing to the company's outlook."The cautious outlook does not give us any comfort that the headwinds, especially in Currency are easing, and note that the current euro weakness against the US dollar is aiding European competitors," said Investec.Investec said that revenue of £472.1m was below its estimate of £497.4m and consensus of £497.5m."Taking the cautious outlook and making only small adjustments to its existing low revenue growth rates and margins on the lower full-year 2015 revenue outturn results in a downgrade to our FY 2016 earnings per share estimate of 8% to 33.5p," Investec said.