(Bloomberg) --
De La Rue Plc, the British firm that lost a contract to make British passports after Brexit, saw its shares plunge as much as 28% after warning that operating profit will decline in the year ahead. The drop was the steepest since 2014 and sent the stock to its lowest since 2003.
In addition to the contract loss, De La Rue has been hit by competition in money printing and an 18.1 million-pound ($22.8 million) bad debt from a customer in Venezuela that’s not been able to transfer funds due to sanctions against the crisis-ridden Latin American country. Its Chief Executive Officer, Martin Sutherland, will step down, according to a statement Thursday.
The currency crisis in Venezuela has contributed to an increase in money printing volumes, although that impact is expected to reduce in year ahead, De La Rue said.
“The conclusion of the U.K. passport contract in 2020 and the growing competitive pressure in the banknote print market present some significant challenges for our business,” the outgoing CEO said. A process to find his successor has already commenced.
The company, founded by Thomas De La Rue in 1821, will attempt to cut annual costs by more than 20 million pounds by 2022, and announced a reorganization “designed to enhance our strategic focus and generate greater efficiencies.”
The U.K. government’s decision last year to award the passport contract to Gemalto NV -- now a division of France’s Thales SA -- drew sharp criticism from supporters of Britain’s decision to leave the European Union and derision from the tabloid press.
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