By Paul Sandle
Its shares fell 9 percent to a year low of 446 pence in early trading and were down 4 percent at 0851 GMT after De La Rue said it would write-off about 4 million pounds ($5.7 million) of costs associated with the failed bid.
Together with delays in some contracts in the last week of its financial year, this would result in it missing profit expectations, De La Rue said in a statement.
Prime Minister Theresa May said the decision to change British passports from the burgundy shade used by most European Union countries to the traditional dark blue was an expression of British independence and sovereignty.
But reports that Franco-Dutch firm Gemalto had won the tender to produce the new passport was criticised by some politicians and newspapers as unpatriotic, and De La Rue had said it would challenge the decision.
De La Rue, which prints 7 billion banknotes and 15 million passports a year, said that having considered all options it would not appeal the decision, which the British government said followed a "rigorous, fair and open competition".
SURPRISED AND DISAPPOINTED
The existing contract to make British passports is worth 400 million pounds and the new contract starts in October 2019, after Britain leaves the EU in March that year.
De La Rue's Chief Executive Martin Sutherland told BBC radio that he remained "surprised and disappointed", but he had taken a pragmatic business decision not to appeal.
Underlying operating profit for the year to end-March would be in the low to mid 60s million pound range, it said.
Analysts at Investec, who were predicting 71 million pounds, said it was a "disappointing outcome".
Revenue for the year had increased by about 6 percent, with growth across all product lines, it said, although it added that it was "cautious" about its current financial year.
It said it would assist with the transition to the new supplier, and was expecting no impact on its performance in the next 18 months.
Trade union Unite said news that De La Rue was abandoning its appeal would come as a bitter blow to workers in Gateshead, north east England, who now faced an uncertain future.
"Workers will feel let down that the company is not prepared to fight the government's decision to ship the production of the new blue passport overseas," Unite national officer Louisa Bull said.
($1 = 0.7008 pounds)
(Editing by Kate Holton/Guy Faulconbridge/Alexander Smith)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)