De La Rue sensibly quits battle over blue passports
It's bad news for those of us laughing at the silliness. But having issued its second profit warning in a month the company was faced with fighting a war on two fronts
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Your support makes all the difference.Were you, like me, enjoying the “couldn’t make it up” stupidity unleashed when De La Rue, the British multinational passport printer, lost the contract to make the new post Brexit blue ones to a Franco-Dutch rival?
Were you looking forward to seeing Tory Brexiteers once again claim to be free marketeers while tying themselves up in knots trying to attack a decision based upon admirably free market principles, that will save the taxpayer £60m, when the company’s appeal inevitably failed?
I hate to disappoint you, but it looks like it’s now not going to happen after all. So that’s your De La Lot. For the moment.
De La Rue has announced that “having considered all the options” it isn’t going to appeal after all. Perhaps that’s because it really did’t have any grounds to do so.
But perhaps it’s also because this is a business that has more than a few problems, as was made clear by the profit warning that was issued alongside the announcement, the second in a month.
Any student of military history will tell you that you’re asking to get kicked in the teeth if you try to fight a war on two fronts.
De Rue’s bosses were proposing to take on a big, high profile appeal they had little chance of winning while at the same time trying to restore the company’s reputation with its investors by getting it to a place where the market’s expectations are met rather than missed.
Something was always going to have to give.
The latest trading update revealed that operating profits are likely to be “in the low to mid £60s million range”.
The £4m of bid costs relating to the passport fiasco played a role but the company also had to admit to “delays in the shipment of certain contracts”.
Oops.
As a result it has sensibly decided not to fight a hopeless battle with ministers, because if you bid £60m more than your rivals then you should expect to lose. Ain’t free market economics grand?
Perhaps De La Rue executives realised that they were just being silly.
Whatever their thought processes, they can at least now focus their attention focus on winning other work, by taking advantage of those economics and tabling bids that look a mite more competitive than the one for British passports.
This is, after all, a global business that prints passports and other security documents for any number of different countries. Countries that, fortunately for the company, seem disinclined to kick up a silly fuss about a British company doing the work for them.
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