PROFITS at banknote and passport maker De La Rue fell by more than a third in the six months to the end of September amid tougher competition and the strong pound.

De La Rue, which employs about 600 staff in Gateshead - its biggest manufacturing site - is competing against banknote makers around the world who are cutting prices. Many are run by governments, but De La Rue is the world's largest commercial banknote maker.

In September, the group announced its third profit warning in two years. Today it said underlying profit before tax slid by 37 per cent to £20.6m in the six months to September 27, compared with £32.8m for the same period last year. Revenues also took a dive, down 8 per cent from £234m to £214.9m.

The firm was boosted in September after it was named by the Bank of England as preferred bidder for a 10-year extension to its contract to print UK banknotes which will be made at the firm's factory in Debden, Essex.

Philip Rogerson, the chairman of De La Rue, said: "While market conditions have resulted in lower revenues, we have partially mitigated the impact in the first half through cost savings from operational efficiencies and have commenced a further rationalisation of our manufacturing footprint.

"The Board continues to believe that, while current conditions are tough, De La Rue remains a strong, profitable and cash generative business in a market with good medium and long term growth prospects."

De La Rue used the trading update to officially unveil Martin Sutherland as its new chief executive. Mr Sutherland, a former managing director at BAE Systems, 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."

The firm has cut its interim dividend payment by 41 per cent to 8.3 pence per share.