The security printing group had warned in January that adjusted operating profit was likely to be in the range of £36m-£40m, much lower than previous market expectations of £45m-£47m.

In its results for the year to 26 March announced today, De La Rue posted adjusting operating profit of £36.4m, down 4.46% on the prior year.

Sales on continuing operations were down 5.6% at £375.1m. 

Sales at its Currency wing slipped by 2.1% to £280.9m, and adjusted operating profits at the unit rose by 20.4% to £19.5m. 

De La Rue said the market for banknotes had returned to lower-than-normal demand levels following the high demand experienced during the Covid-19 pandemic. 

Staff absence in the UK and Malta during December 2021 and January 2022 because of Covid-19 “also had some impact on production”.

Covid-19 also resulted in delays to the implementation of some contracts and new banknote introduction.  

Polymer production volumes were up 40%. 

De La Rue also noted that a number of central banks were investigating the potential for digital currencies. 

“This is a new area, with the underlying risks, opportunities and benefits not yet clear in many instances. There are many questions still to answer in this space. De La Rue has been working closely with technology providers and central banks to develop our position in this area,” it said. 

At the group's Authentication business, sales were up 16.4% at £90.3m, with adjusted operating profits up 44.2% at £16.3m. 

De La Rue said that since the end of its financial year it had encountered further headwinds that were likely to impact profits and could affect sales in 2022/23. 

Supply chain inflation was likely to increase operating costs by £5m, despite mitigating actions.

“For this reason, the board now expects that adjusted operating profit for FY23 will be broadly flat versus FY22, and weighted towards the second half,” the PLC stated. 

CEO Clive Vacher said the group’s performance should be viewed in the light of unprecedented global events, supply chain inflation, and the various impacts of Covid-19 “none of which were anticipated in the original Turnaround Plan of February 2020”.

"We have prudently revised our outlook for the financial year 2022/23 adjusted operating profit, due to further headwinds experienced since the end of our financial year, and a realistic expectation of how far we can mitigate them,” Vacher said. 

“While this means that our progress is slowed, we remain strongly on the right path strategically and operationally to create a strong, cash-generative company in the medium term.”

De La Rue shares were down 7.3% at 102.88p in early trading (52-week high: 210.15p, low: 98.27p).