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De La Rue jumps as it unveils £35mln cost cutting plan

The banknote maker said the new cost reduction plans will “significantly exceed and accelerate” previous commitments and allow it to “compete more strongly across all its market segments”

De La Rue PLC - De La Rue jumps as it unveils £35mln cost cutting plan

De La Rue PLC (LON:DLAR) shares climbed on Monday as the banknote maker unveiled a restructuring plan that will see it slash costs by around £35mln a year.

The company, which until recently was responsible for making the UK’s passports, said the new cost reduction plans will “significantly exceed and accelerate” previous commitments to cut £20mln by the 2021/22 financial year, adding that the reduced expenses will allow it to “compete more strongly across all its market segments”.

READ: De La Rue warns of “material uncertainty” over future

De La Rue is also targeting improved profitability in its currency division and expects “significant year-on-year growth” in its authentication business for the next several years.

"I am pleased that we have delivered our review of the business on schedule and are on track with the Turnaround Plan, which will deliver significant improvement in the operational and financial performance of the company”, said chief executive Clive Vacher.

The turnaround plans were accompanied by an update on the company’s current trading where it reconfirmed its current guidance for an operating profit of between £20-£25mln and said it expects to “operate within its banking covenants” for the 2019/20 financial year.

The stability marks a dramatic comeback for the business compared to November last year when the firm warned of “material uncertainty” over its ability to continue as a going concern as deteriorating trading conditions cast doubts over its banking arrangements.

Investors were quick to rush back to the stock, which bounced 15.7% to 141.4p in early trading.

Quick facts: De La Rue PLC

Price: 178.2 GBX

LSE:DLAR
Market: LSE
Market Cap: £347.52 m
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