- De La Rue, the world’s largest banknote maker, issued a profit warning on Wednesday.
- The company said in a stock exchange filing that demand for banknotes is at a 20-year low.
- Central banks around the world snapped up banknotes during the pandemic and are working through stockpiles.
With demand plunging to a two-decade low, printing money isn’t as lucrative as it used to be.
De La Rue, the world’s largest banknote maker, issued a profit warning on Wednesday, flagging a lower demand for cash.
“The demand for banknotes has been at the lowest levels for over 20 years, resulting in a low order book going into FY24,” the 210-year-old company said in a Wednesday filing to the London Stock Exchange. De La Rue prints banknotes and supplies raw materials for physical cash across 140 countries, including the UK, Thailand, and Qatar.
The company now expects its full-year adjusted operating profit for the 2024 fiscal year to be around low-£20 million, or $25 million, half of its previous unadjusted estimates of £40.1 million, according to Refinitv data seen by Insider.
“The challenge at the moment is that there simply isn’t quite the demand there to be where we want to be, which is disappointing,” Clive Vacher, the CEO of De La Rue, told Reuters on Wednesday.
Central banks snapped up banknotes during the pandemic, but they are now working through the stockpile before acquiring new stocks, De La Rue said in November 2022. Demand for banknotes has also been depressed due to government finances being squeezed by inflation, the cost-of-living crisis, and access to foreign exchange in some cases.
It doesn’t help that the modern banknote — much of which is made from polymer — lasts much longer than paper banknotes. The Bank of England estimates its polymer banknotes made by De La Rue last for at least two-and-a-half times longer than paper.
De La Rue said Wednesday it is discussing with banks about amending lending terms that will take into account the company’s revised outlook and higher interest rates.
The company’s profit warning on Wednesday sent De La Rue’s share prices plunging nearly 20% to £40.50 apiece on the same day. Share prices are down 1.5% at £39.90 at 9.19 a.m. London time on Thursday. The stock is trading nearly 50% lower so far this year.
On the upside, De La Rue expects revenues from its authentication division to exceed £100 million for the first time in the coming fiscal year. This is in part driven by demand for Australian passports, for which De La Rue is a supplier, according to the Wednesday filing.
The company’s fortunes are well chronicled with its Wednesday profit warning the third since January 2022. It was already closing production lines and cutting jobs as demand for cash slowed in 2015 due to the rise of mobile internet-based payments.
De La Rue did not immediately respond to Insider’s request for comment.