In a trading report, British banknote producer De La Rue predicted lower profitability due to lower demand.
The solitary currency printer for the Bank of England reported that demand for banknotes is at its lowest level since central banks stockpiled cash out of fear of the Y2K bug.
De La Rue, a British banknote producer, reported a 20-year low in note demand.
In 2000, central banks hoarded notes out of dread of the millennium bug, causing demand to plummet to a level not seen in 20 years, according to a spokesperson for De La Rue.
This diminished demand in the years following the millennium change.
Before the year 2000, there was widespread concern that the computer systems supporting the financial and banking sectors. Also the industry as a whole, would not recognize the double zero of dates after 31 December 1999 and malfunction.
The spokesperson stated that the current low demand is also due to central banks stockpiling currency during the COVID-19 pandemic.
During uncertain situations, such as a global pandemic, banks, ATM operators, and post offices typically stock up on banknotes. Concurrently, cash usage and some forms of discretionary expenditure declined.
De La Rue’s fiscal year 2024 order book is low, and the company’s outlook is “significantly uncertain.”
The effects are also being felt in the current fiscal year of 2023, with the company announcing on Wednesday morning that it expects full-year adjusted operating profits to be in the “mid-single-digit percentage” range, or around 5%, which is below market expectations.
De La Rue announced that it is in discussions with its lenders to amend its banking covenants to reflect the revised outlook and the increase in the company’s funding costs as a result of higher Bank of England interest rates.
The trading update released on Wednesday was the latest in a series of profit warnings triggered by management errors.
De La Rue asked its pension fiduciaries for breathing room by delaying nearly £20 million in retirement funding payments.
Late in 2012, De La Rue criticized its auditor, EY, for including a continuing concern caution in the company’s financial statements.
