Shares in Britain's De La Rue, the world's largest banknote printer, fell on Wednesday (12) after the company issued a profit warning, as more people abandon cash in favour of card and contactless payments.
De La Rue's stock dropped over one-third when the company announced that banknote demand was at its lowest in more than two decades.
Operational profit was likely to fall short of market expectations in the fiscal year ending March 2023, according to 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.
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.
Britain left the European Union at the start of 2021.
(AFP)
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