De La Rue Plc shares dropped by as much as 24% on Tuesday after the company issued a warning that it would possibly collapse if a turn around plan does not succeed. The firm has struggled in the past two years since losing the $517m UK passports contract to a French firm. Besides, the firm is facing cash troubles as the world moves from cash to card and online payments. The security printer prints currency for 140 central banks globally.
“Therefore, we have concluded there is a material uncertainty that casts significant doubt on the group’s ability to continue as a going concern,” De La Rue said.
Earlier this week, the security printer suspended its dividend and reported a loss for 2019 H1. De La Rue posted a loss of $15m for the half-year ending September 2019, as compared to a $9.1m profit at the same time last year.
“In mitigation, the directors have suspended future dividends, and management is focused on delivering the company turnaround plan.” Continued De La Rue when announcing its H1 results.
Further, the company is struggling with growing debt and the exit of crucial executive members, which caused instability. Last year may, the UK security printer had to write off $23m after the Venezuelan Central Bank failed to pay its bills.
“The business has experienced an unprecedented period of change with the chairman, chief executive, senior independent director, and most of the executive team leaving or resigning in the period.” said CEO Clive Vacher.
The exit of the company will declare around 2,500 people unemployed globally, including in Kenya.
There’s Still Hope for De La Rue
Nevertheless, there is some hope as the company embarks on a new restructuring plan. According to Vacher, the company has already restructured its operations in two divisions: authenticating goods as genuine and currency services. Moreover, the firm is cutting costs faster, aiming to save $25.8m annually. The company is also planning a full review by the end of March 2020.