Clive Vacher, the CEO of De La Rue (DLR), has stated that “urgent action” is being taken on a turnaround plan following a 20% fall in company shares that risks the firm’s collapse, sanctioning a wholesale corporate reviewing of strategy, management and operations.
The plan involves a detailed review of the company’s operations, costs, and product and service portfolios with the aim of establishing industry-leadership positions throughout the areas in which the company will choose to work.
Moreover, as well as the review, DLR will also be implementing a set of immediate actions which are scheduled for a Q1 2020 completion date.
Regarding these plans, Vacher stated: “Between now and the end of calendar Q1 2020, we will complete a full review of the business and design a comprehensive turnaround plan for the Company.
“In the meantime, we have already identified and started to implement the urgent actions needed to stabilise the business and allow us to complete the review. With strong emphasis on cost control and cash management, coupled with a focus on innovation and reversing the revenue decline, we will become a leaner, more efficient Company and drive shareholder value.”
Despite the fall in shares and the ‘urgent’ need for change, one of the key points discussed in the review of the company is the demonstration of year-on-year growth of its Authentication business as it currently works across both the commercial and government sectors addressing consumer and brand owner demand for protection against counterfeit goods.
As a result of this growth as well as the demand for new and innovative ways of protecting consumers, DLR has continued its investment in software capabilities, service provision and R&D focused on IP generation. As well as this, the company is exploring blockchain technologies and has piloted DLR Validate, a consumer application for validation holograms.
Furthermore, following the GRS market shift which saw added countries adopt the World Health Organisation’s Framework Convention on Tobacco Control into law, the DLR announced that its contracts, which include the United Arab Emirates and the Kingdom of Saudia Arabia, are now live and delivering as expected in regards to covering tobacco products.
Moreover, DLR also entered in an exclusive distribution agreement with KushCo Holdings in September which sees it offer anti-counterfeit security labels in North America to the legalised cannabis industry as well as having recently announced the completion and operationalisation of the Malta security print line following its Gateshead transfer.
A statement released by the company read: “The turnaround plan for the Company will be based on a clear, compelling, simple and understandable vision for both business divisions, which is inclusive and open. It will be designed and executed with full and clear accountability, driven by data and a desire to problem solve. We will have regular follow-up reviews and actions to ensure initiatives are on track. Finally, we will focus on our customers, with excellent execution and dependability, thereby creating progressive and reliable commercial success.”
As discussed by Vacher, the immediate actions being implemented focus on cost control and cash management. These actions will include a reduction in discretionary spend; a deeper focus on cash items including inventory management, accounts receivable and operational efficiency drivers; an acceleration of DLR’s restructuring plan, specifically targeting company-wide overhead cost reduction; risk-mitigating actions to deliver the firm’s H2 2019/20 and full year forecasts; and ensuring the right leadership at all levels of the organisation.
Vacher concluded: “The business has experienced an unprecedented period of change with the Chairman, CEO, senior independent director and most of the executive team leaving or resigning in the period.
“This has led to inconsistency in both quality and speed of execution. The new Board is working to stabilise the management team, which we believe will take some time.
“In response, we are reviewing our cost base and will make the structural changes that will further strengthen our competitiveness in a challenging market. We continue to focus on building momentum in the higher-margin security feature market and continue to innovate to improve our position in this fast-growing area.”