De La Rue says banknote demand is recovering

De La Rue has said that a bounce back in demand for cash in the wake of the pandemic has improved the operating environment for its business, which has been under pressure with a string of profit warnings in the last few years.

The company reported total revenues of £350m ($444m) in fiscal 2023, a fall from £375 million a year earlier, consisting of £255m from currency, £91m from its new authentication business, and £3.4m from its residual identity solutions unit, which was mostly sold off in 2021. Operating profit came in at £28m, down almost a quarter.

Authentication revenue rose “modestly,” according to the company, with gains coming from government revenue solutions (GRS) such as tax stamps coming onstream in Bahrain, Qatar and Oman, and a full year of contribution from polycarbonate data pages manufactured for the new Australian passport.

That was offset however by lower sales of security labels to Microsoft used in the Windows PC market, and the end of the UK contract to provide COVID-19 vaccine brand protection seals. The division remains on track to top £100m in sales in the coming fiscal year, said De La Rue.

Chief executive Clive Vacher said: “Following a significant downturn in currency demand over the past 18 months, we have witnessed encouraging signs of recovery with strong bid activity, a positive win rate, and the significant majority of FY24 banknote print volume already contracted.”

"In addition, authentication is on track for significant revenue growth in the current financial year,” he added.

That improved financial outlook has had one key effect – for the first time in several quarters, there is no “'material uncertainty” about De La Rue’s ability to operate as a going concern – and investors responded by boosting the company’s share price.

Shares are currently trading at £49.90, well above a low of £30 reached by the stock in June but still below its 52-week high of £50.