De La Rue, which recently announced plans to invest in its Bolton site, has warned that profits are likely to be below market expectations.
It says that the demand for banknotes is at the lowest level for more than 20 years. This has caused a “significant degree of uncertainty” looking forward.
The company has 4 currency and authentication plants in the UK, two of which are in Gateshead and Westhoughton.
In 2021 it said it would be investing £20m in bank note technology, following a 3 year contract with the Bank of England. That investment would include expanding its Lancashire site and employing 70 new staff.
This week’s update to the Stock Exchange revealed that it expected its operating profits to be “a mid-single digit percentage below market expectations” in the “low £20m range.”
It added:
“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.
“We expect revenue in the Authentication division to exceed £100m for the first time in FY24, driven by the existing order book, including the full-year impact of the Qatar, Bahrain and Oman GRS programmes, and a substantial increase in demand from the Australian passport programme. This progress will be somewhat offset by the ongoing lower global PC sales which, according to IDC, is likely to start to recover only in calendar year 2024.”
De La Rue added that it was in discussions with lenders to amend its banking covenants, “reflecting the revised outlook and also reflecting the increase in the Company’s funding costs resulting from higher Bank of England base rates.”
The statement also revealed that it was “in conversations” with the Trustee of the De La Rue Pension Scheme and has “officially requested a deferral of the next £18.75m of deficit repair contributions.”
