Banknote printer's shares drop 2%

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Banknote printer De La Rue said supplies to a key customer are still suspended

Banknote printer De La Rue said supplies to a key customer are still suspended as it has yet to resolve talks over production problems five months after they first emerged.

But the world’s largest producer of banknotes said issues with the client, understood to be The Reserve Bank of India, were yet to have an adverse impact on the rest of the business.

De La Rue suspended production on the contract in July, after it claimed some employees falsified paper specification test certificates at a plant in Overton, Hampshire. Chief executive James Hussey was forced to resign and the incident cost the firm £35 million in its half-year results.

Shares dropped 2% after Friday’s update, which came as the company confirmed trading since September 25 had been in line with expectations.

Most recently, the firm has been batting off takeover interest from French rival Oberthur.

The Paris-based firm ditched its plans on Monday after De La Rue rejected a raised offer, which valued the firm at roughly £925 million. Shares plunged 16% when Oberthur pulled the plug on its approach.

Chief executive Tim Cobbold, who joined in January, said he was undertaking a strategic review and would update the market with its progress in May, when the firm delivers its full-year results.

He said: “My first month at De La Rue has confirmed the potential to build on the considerable strengths of the business by extending our customer base and improving both how we work and the service we deliver to our customers around the world.”

The company said it expected to produce 10,000 tonnes of banknote paper in the full financial year, which according to analysts is below capacity of 16,000 tonnes.

De La Rue, which also supplies security documents such as passports, authentication labels and fiscal stamps, and provides cash and sorting equipment to central banks, said it was benefiting from the roll-out of the new British passport since October.

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