Despite being the world’s largest banknote printer by market share, De La Rue has issued two profit warnings in the past 18 months. The company has cited increased competition for the reason behind the warnings. The stock is trading at 799; it has fallen 25% since the profit warning in November 2012 and is not showing any signs of recovery from the warning in October 2013.
De La Rue was contracted by the Bank of England to print sterling notes, but the firm lost a portion of its business when the BoE revealed that Innovia would be providing the polymer for the new plastic notes it intends to use.
As the company has issued two profit warnings in the less than two years, expectations have been managed to the downside. Slightly better-than-expected figures could drive the price towards 872, but if profits are poor we could breach the 2014 low of 737.