British firm in turmoil as profits plunge after government gives ‘Brexit’ blue passports contract to French rival

De La Rue boss quits as company struggles after losing out to Franco-Dutch business Gemalto

The boss of a British company that lost out on a £490m contract to make blue passports after Brexit has resigned after the firm’s profits crashed 77 per cent.

Martin Sutherland, chief executive of Basingstoke-based De La Rue, announced his departure on Thursday as the firm unveiled a major overhaul in the wake of the contract loss.

Last year, the government awarded the contract to make passports after Brexit to Franco-Dutch rival Gemalto, meaning that the symbolic documents will be made in France rather than on British soil as they are currently.

De La Rue also announced a major cost-cutting plan as it tries to deal with the fallout from that decision. Shares in the company plunged as much as 28 per cent on Thursday after it warned profits will fall in the year ahead.

The company currently produces the burgundy-coloured passports which have attracted the ire of some Leave supporters, but its contract runs out in 2020.

Outgoing boss Mr Sutherland said: “To partially mitigate against [losing the contract], today we have set out a three-year cost reduction programme intended to deliver in excess of £20m in annual savings by full-year 2022,” he said.

“In addition, we will be proposing a reorganisation of our business over the next 12 months designed to enhance our strategic focus and generate greater efficiencies.”

Last year, Mr Sutherland said he found it “disappointing and surprising” that this “icon of British identity is going to be manufactured in France”.

Conservative MP Jacob Rees-Mogg said at the time that it was “odd to have a national symbol produced abroad”.

De La Rue has also faced other pressures including “significant structural change in the industry and real strategic change within the business”, Mr Sutherland said.

“With a clear strategic vision now in place and being executed, now feels like the right time for me to hand over to a new leader, to take things to the next phase. I wish the board and the company every success.”

De La Rue also blamed “growing competitive pressure in the banknote print market” for a downturn in performance, as profits dived over the past year.

Operating profits for the year to March 2019 plunged 74 per cent to £31.5m, down from £123m the previous year.

Revenue jumped 14 per cent to £564.8m, significantly driven by growth in its currency division.

Currency sales increased by 20 per cent to £447.1m, while it was weighed down by a decline in ID revenue, which fell by 4 per cent to £78.4m.