Banknote printer De La Rue has revealed a strategy rethink for its identity business after losing a key UK passport contract.
The group announced it will refocus the business on specific parts of the manufacturing process for identity documents.
Chief executive Martin Sutherland said the shift in strategy came after the group lost the contract to make the UK’s post-Brexit blue passports to Franco–Dutch firm Gemalto earlier this year.
He said: “Over the last six months we have conducted a thorough review of our strategy and market positions.
“In the light of the UK passport decision, we have concluded that we will refocus our identity business on the supply of higher margin security features and components.”
De La Rue will concentrate on separate parts of the manufacturing process such as on polymer plastics and security technology.
The company is currently in the midst of a five-year plan to transform De La Rue into a “less capital intensive, more technology led security product and services provider” in order to improve earnings.
The Government came under heavy fire in March for its decision to choose a European firm for the contract, but claimed it will save £120 million during the lifetime of the 11-and-a-half-year contract.
The company abandoned its appeal against the Government’s decision in April, when it revealed that it will take a £4 million hit from its failed bid.
De La Rue, which has produced banknotes since 1860, is also the firm behind both the new polymer £5 and £10 notes.
Details of its strategy overhaul came as De La Rue posted a slump in half year profit due to lower margins in the currency division and continued investment in the business.
For the six months ended September 29, the banknote maker made a pre-tax profit of £7.1 million compared with £18.9 million in the same period a year earlier.
However, revenue increased 5% to £257.6 million and the company maintained the interim dividend at 8.3p a share.
Mr Sutherland said: “We maintain a strong order book and pipeline which provides good visibility for the second half of this year and into next year.
“With good revenue coverage from the group’s 12-month order book of £365 million and based on the orders planned for production and shipment in the second half, we are confident that we will meet our expectations for the full year.”