De La Rue has announced that its H120 profitability continues to be challenged and that market expectations for FY20 remain significantly too high. With no detail on the factors driving the weak performance, we are placing our forecasts under review pending H120 results on 26 November. With the arrival earlier this month of the new CEO, Clive Vacher, management is undertaking a detailed review of the business and we expect to hear at least initial thoughts on this with the H120 results. A full reset of the strategy may take more time but, given the reduced earnings capacity of both Currency and ID Solutions, the supportive dividend may be the first casualty.
