The security printer blamed overcapacity in the banknote paper market and pricing pressure in print together with slower than expected growth in its Solutions business for the £11.9m drop in profit.

Group revenue fell 8% to £214.9m (H1 2013: £234m) for the six months, while pre-tax profit and net profit both slumped 36% to £18.1m and £14.2m respectively.

De La Rue chairman Philip Rogerson blamed "market conditions" for the lower revenues, which he said had been "partially mitigated...through cost savings from operational efficiencies".

He added that the firm had commenced a "further rationalisation of our manufacturing footprint" in relation to the decision to close De La Rue's site in Dulles, VA which was largely focused on the production of mature products such as travellers and bankers cheques.

The group's Currency division posted a 4% increase in banknote print volume, to 2.7bn notes, but a 4% fall in banknote paper output, to 4,500 tonnes; segment revenue fell 6% to £136.8m while operating profit was down 26% at £17.2m due to "lower average print and paper prices".

De La Rue said that it had maintained market share in Currency through "adopting a more tactical approach to both pricing and utilisation of spare capacity". The company added that process improvements had enabled it to mothball one paper machine at its Overton mill.

The group's Solutions division reported a 16% drop in revenue, to £80.3m, and a 39% drop in operating profit, to £9.4m; within this Identity Systems posted a 16% fall in revenue to £34m and a 56% drop in operating profit to £5.9m due to "an unusually high number of longer term contracts completed in the comparable period in 2013/14 in the international business combined with lower than forecast levels of new business and upgrades".

"The trend towards e-passports from machine readable passports has been slower than expected and in addition a number of prospective orders have not been put out to tender as anticipated but have been extended with the incumbent supplier," the firm said.

De La Rue's new chief executive Martin Sutherland, who was appointed on 13 October, said: "I am delighted to have joined De La Rue and I am confident that, notwithstanding the current challenging market conditions, the fundamental strengths of the business and the operational improvements achieved in recent years, position the group well. Over the coming months I shall be evaluating the strategy of the Group and expect to report on this with the full year results in May 2015."

De La Rue's pension deficit increased £31.7m since the 2013/14 financial year end to £197.3m, while the 2010 paper production issues continue to be reported as a contingent liability.

The group flagged the post-half year end award of the 10 year contract with the Bank of England, commencing in April 2015, although this contract is believed to be less profitable than the previous iteration.

De La Rue's share price, which fell sharply on September's full year profits warning, was largely unchanged at 550p at the time of writing.