Lower underlying profits forecasted by De La Rue
Banknote printer De La Rue, which operates from a site in Gateshead, said underlying profits are expected to be significantly lower than the previous year despite its cost reductions efforts.
The banknote printer, which earlier this month was named as the preferred bidder to print banknotes for the Bank of England, said both underlying operating profits and underlying pre-tax profits will be approximately £20m lower than that reported for 2013/14.
In the previous year, The company reported an underlying operating profit of £89.3m and an underlying pre-tax profit of £77.3m.
The trading update comes as new chief executive Martin Sutherland prepares to join the company on 13 October 2014.
De La Rue said recent orders secured for delivery in the current and next financial year within the currency division have been "good in respect of volumes but disappointing in respect of pricing".
It added that challenging market conditions have deteriorated further with lower prices and reduced margins in both banknote print and paper.
In a trading update for the six months to 27 September 2014, De La Rue said: "Based on recent orders and current trends within both the currency and solutions divisions the board expects the current difficult market conditions to continue in the 2015/16 financial year.
"The effect of the more recent pricing pressures together with certain contractual price reductions, which will come into effect in 2015/16, on a number of long-term contracts will impact margins and profitability further."