De La Rue hits rock bottom: banknote printer drops to record low with demand for cash at lowest level in more than two decades
Shares in banknote printer De La Rue plunged to record lows after it warned that demand for cash has reached its lowest level in more than two decades.
On a gloomy day for the 210 year old company, one of London’s oldest shares plummeted by more than a third in early trading to below 33p each.
That was the lowest level since it went public in 1947. The share later closed down 19 per cent, or 9.5 pence, to 40.5 pence, giving it a value of just £80 million.
The collapse came as De La Rue warned earnings for the year ended March 25 were “below market expectations,” sparking new calls for change at the top.
The Basingstoke company said declining demand for cash created a “significant degree of uncertainty” for the year ahead.
Slump: La Rue shares plummeted more than a third in early trading to below 33p each after the note printer warned cash demand has reached its lowest level in more than two decades
It expects profit for the financial year 2024 to be just over £20m, down from previous forecasts of more than £40m.
“Demand for banknotes is at its lowest level in more than 20 years,” De La Rue said, adding that while there were signs that the market was recovering, the timing of a recovery remained uncertain.
As a result, it is in talks with lenders to try and adjust the terms of its banking arrangements to match its bleak outlook.
De La Rue has also approached his pension scheme manager to ask for a deferral of a £18.8 million contribution to the fund.
The profit warning, the last of the last 12 months, will put further pressure on the beleaguered group. Shares are down nearly 50 percent this year and more than 95 percent in just over a decade.
De La Rue has struggled for years and in 2018 lost out on a lucrative contract to print UK post-Brexit passports.
It has also been affected by the rise of card and contactless payments, reduced demand for its notes, rising costs and higher interest rates.
“Drastic change is needed to convince shareholders of a brighter outlook,” said Interactive Investor’s Victoria Scholar.
De La Rue has been embroiled in a long-running feud with activist Crystal Amber, the third-largest investor with a stake of nearly 10 percent, who said last week a turnaround plan “has failed on all counts.”
Richard Bernstein, founder of Crystal Amber, told the Mail that ‘the writing had been on the wall’ and that the decline was ‘a tragedy’.
“Something has to change immediately,” he said. He demanded that chairman Kevin Loosemore ‘go now’, adding: ‘The board blames everyone, but what more needs to be done before they take responsibility?’
Crystal Amber is pushing for a general meeting where it will file a motion to have Loosemore kicked off the board and replaced by private equity veteran Pepyn Dinandt. Loosemore survived an earlier bid to oust him after nearly 83 percent of shareholders supported him in a vote.
Bernstein also warned that De La Rue was threatening to become a takeover target. “Unless we have a significant change now, it’s almost inevitable that someone will buy the company as it’s a great brand with tremendous recovery potential,” he said.
Among the potential buyers would be Crane NXT, the company’s US rival.