De La Rue chairman told to quit
Top investor brands latest profit warning ‘Liz Truss moment’ for banknote boss
DE La Rue’s boss is under mounting pressure to quit after his company’s latest disastrous update was branded his ‘Liz Truss moment’ by a top shareholder.
In yet another setback for longsuffering investors, shares in the 201-year-old banknote printer tumbled 23pc after it posted its third profit warning of the year.
De La Rue – which makes banknotes for countries around the world but lost the contract to print post-Brexit UK passports four years ago and is in the process of laying off staff to save cash – warned it could even go bust.
The shares have lost 50pc of their value this year and 60pc since Kevin Loosemore took over as chairman in October 2019.
The update fuelled tensions between De La Rue and activist investor Crystal Amber – its second largest shareholder with a 9.9pc stake – which has called for Loosemore to resign and pushed to appoint a representative to the board.
Crystal Amber stepped up its campaign yesterday, with founder Richard Bernstein describing the latest profit warning as a ‘Liz Truss moment’ for Loosemore – referencing the short and troubled tenure of the former prime minister, who quit after just after seven weeks.
Calling on the company to launch a strategic review, including a potential sale, Bernstein told the Mail: ‘ This is the third profit warning in 2022 for De La Rue. There is nothing in today’s update that signals why there won’t be a fourth in the spring.
‘Making staff redundant is not a strategy – it’s a tragedy. De La Rue was a great company but it’s being outclassed by its competitors. Rather than accept responsibility, the chairman is blaming everyone else – including us as shareholders – for being a distraction for articulating our justifiable concerns. ‘This is not about the survival of Loosemore as chairman. It is about the long-term survival of De La Rue. Kevin Loosemore needs to accept responsibility and leave town now.’
Bernstein’s comments were the latest salvo in an ongoing battle between his firm and De La Rue.
Earlier this year, Loosemore accused Bernstein of suggesting ‘ market manipulation’ tactics when the investor said he wanted to propose a strategy, which could help rebuild De La Rue’s sliding share price. Bernstein hit back, claiming Loosemore’s comments were defamatory. Behind closed doors, Bernstein suggested Loosemore should consider resigning. In an unusual move, De La Rue called a shareholder vote – due to be held next Friday – on the chairman’s future, seemingly in an effort to prove they had the backing of most investors. But after yesterday’s profit warning, shareholders may be a little more reluctant to throw their weight behind Loosemore. De La Rue reported a 46.6pc slump in profits for the six months to September 24 to £9.3m as it grappled with soaring costs and a slowdown in currency orders.
With first-half revenues down 8.3pc to £164.3m, the company said full-year profits could now be as low as £30m – some £6m below analyst forecasts. And it raised further concerns with a warning that in a ‘severe but plausible’ scenario it could go bust.
De La Rue has had a tortuous four years since losing the lucrative contract to print Britain’s post-Brexit passports in 2018. In May it crashed out of the FTSE 250 index.