De La Rue Is Failing As Demand For Banknotes Declines

Due to declining bank note demand, De La Rue cut their 2019 projection.

The banknote producer said in a trading update that demand for banknotes has been low for over 20 years, when central banks stockpiled notes for fear of the millennium bug, resulting in a low order book going into FY24.

De La Rue forecasts FY23 adjusted operating earnings to be mid-single digits below market expectations. FY24 adjusted operating profit is estimated to be around £20m.

“The downturn in currency, impacting both De La Rue and the wider industry, is causing a significant degree of uncertainty in terms of outlook for FY24,” states the firm. “However there are encouraging signs that the market is recovering, with a significant number of new tenders actively underway but the timing of this recovery remains uncertain.”

After losing some significant clients and facing the industry shift to digital payments, De La Rue’s worth has dropped 89%.

The company has tried to make more money by getting into security and making passports.

The company is in talks with its lending banks to alter its banking covenants to reflect the downgrading and greater financing costs due to rising Bank of England base rates.

The company is also talking to the Trustee of the De La Rue Pension Scheme and has asked for the next £18.75m of deficit repair payments to be put off.