They have what everyone dreams of – a licence to print money.
But currency printer De La Rue announced yesterday tough competition is driving down banknote prices and will wipe about £10million from profits.
Shares in the 200-year-old group dropped 11% after its second profits warning in less than a year, as it said earnings for the year to the end of March will be about £90million, compared with a £100million operating profits target.
The Basingstoke, Hampshire-based group prints more than 150 national currencies, including notes for the Bank of England.
It said: “The continuing over-capacity in the banknote paper market has led to a worsening pricing environment in the printed banknote market.”
Volumes of printed banknotes were 10% lower to 2.6billion notes but it grew volumes of banknote paper by 4% to 4,700tonnes during the six months to the end of September, despite the glut of capacity among manufacturers. And they warned that increasing demand for plastic banknotes – with the Bank of England proposing switching to polymer notes – could heap more pressure on the group’s paper-making business.
De La Rue developed its first polymer banknotes in the 1970s and launched a new product this year.
De La Rue expects profits for the six months to rise 18% to about £39million, on lower revenues, as cost-cutting feeds through. Its 12-month orders have grown to £232million since the start of the year.