De La Rue’s boosted by resurgent banknote demand

  • The Hampshire-based company’s customers include the Bank of England
  • De La Rue’s currency order book has more than doubled since September
  • Its first-half operating losses plunged by nearly three-quarters to £3.4m

De La Rue’s currency division is enjoying a strong rebound following multiple new contract wins and bumper demand for banknotes.  

The Hampshire-based company, whose customers include the Bank of England, has struggled in recent years as demand for its paper currency plummeted to a two-decade low.

But since the group said its currency order book has more than doubled from £105.8million to £219.8million since the end of September on the back of ‘several significant orders’, De La Rue said. 

Order strength: Banknote printer De La Rue revealed its currency order book has more than doubled since September from £105.8million to £219.8million

Physical cash usage among Britons has bounced back in 2023 after being hit by the Covid-19 pandemic accelerating the transition towards contactless payments.

De la Rue also said its authentication business had secured a three-year contract extension and is in the late stages of agreeing on another deal, bringing it closer to achieving £100million of revenue this year as predicted.

But the London-listed firm saw overall revenue dip by 1.7 per cent to £161.5million in the six months ending September.

Sales were affected by the shutdown of its Kenyan operations, the loss of an HM Revenue & Customs contract, and weaker demand for polymer, which is now commonly used to make banknotes.

Yet the group’s adjusted operating profit was £7.9million, instead of breakeven as it had forecasted.

Meanwhile, its operating losses plunged by nearly three-quarters to £3.4million because of costs incurred last year related to the end of a supply agreement with Portals Paper.

De La Rue bosses reiterated their annual guidance for adjusted operating profits to be in the ‘low £20million range’ and net debt in the ‘mid £90million range’.

Meanwhile, De La Rue’s lenders have agreed to extend its banking facilities to July 2025 and cut the firm’s revolving credit facility limit by £15million to £235million.

Clive Vacher, chief executive of De La Rue, said the ‘robust performance in the first half reflects the important actions that we have taken since 2020 to make the company resilient to changing market conditions’.

He added: ‘These actions have allowed us to navigate a downturn over the past 18 months, particularly in currency, and I am pleased that the market is now showing signs of continuing recovery.’

De La Rue shares were 6.2 per cent down at 76p on Tuesday morning, making them one of the five worst performers on the FTSE All-Share Index.

The group’s share price has declined by approximately 80 per cent in the past five years amid a structural decline in the popularity of paper cash.

Mark Crouch, analyst at eToro, warned: ‘Looking further ahead, De La Rue must find alternative revenue streams to make up for dwindling cash use.

‘These days, many people rarely use cash, a trend that is likely to become more widespread in the future.’