SHARES in money printer De La Rue crashed 31% today after the its latest profit warning sent traders scurrying for the exit.
De La Rue has a storied history going back to 1821, and has 140 clients across the world including major central banks.
Today it said a “downturn in currency” – people using less and less physical cash – was causing a “significant degree of uncertainty” for next year.
“The demand for banknotes has been at the lowest levels for over 20 years,” warned CEO Clive Vacher. He has been in charge since 2019, but many of the problems precede him.
Predecessor Martin Sutherland left after he lost the contract to print the post-Brexit blue passport to a Franco-Dutch company Gemalto. He challenged then-Prime Minister Theresa May to explain why it was a “sensible decision to offshore the manufacture of a British icon”.
Today De La Rue said profits for next year will be in the low £20 millions, and it is in talks with banks over loan deals. Higher interest rates are hitting its costs.
Previously, investors had been expecting profits of about £40 million.
The stock fell 15p to 35p, leaving the business valued at just £68 million. The shares are down 92% in the last five years.
This is the latest in a string of profit warning this year. It is also in talks with pension trustees to delay a payment into the staff fund of £18.75 million.
Victoria Scholar at interactive investor says: “The British currency and passport maker has been suffering from weak demand for banknotes which is languishing at a 20-year low. 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. Drastic change is needed in order to convince shareholders of a rosier outlook.”
