Shares in Britain’s De La Rue, the world’s biggest banknote printer, slumped Wednesday on a profit warning as more consumers ditch cash in favour of card and contactless payments.
De La Rue’s stock dived by almost one third as it declared banknote demand was at the lowest level for more than two decades.
Operating profit was expected to fall below market expectations in its 2023 financial year to March, it warned in a trading update.
The group, which posts annual earnings next month, also forecast profit would be in the low £20-million range for the 2024 fiscal year.
“The downturn in currency, impacting both De La Rue and the wider industry, is causing a significant degree of uncertainty in terms of outlook,” De La Rue added.
“The demand for banknotes has been at the lowest levels for over 20 years, resulting in a low order book” for its financial year to March 2024.
The company is behind around one third of the world’s banknotes, including the Bank of England’s new King Charles III design.
De La Rue provides services to more than half of the world’s central banks and issuing authorities.
However, the company has been hit hard in recent times by a post-pandemic boom in contactless transactions and online banking, as well as supply-chain woes, according to analysts.
De La Rue was also dealt a heavy blow in 2018 when it lost a key contract to make UK passports to Franco-Dutch firm Gemalto following Brexit.
“In recent years, De La Rue has struggled with the major loss of its British passport contract after Brexit, increased costs, supply chain woes, and a structural decline in demand for physical cash amid the rise of contactless payments and digital banking,” said Victoria Scholar, head of investment at Interactive Investor.
The 2018 decision to select a foreign firm to produce UK passports sparked an outcry from pro-Brexit supporters.
Gemalto’s 10-year production contract began in late 2019.
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