De La Rue in deep distress

Kevin Loosemore, the chairman of banknote printer De La Rue, has quit “after months of... criticism of the company’s leadership by one of its largest shareholders”, say Joanna Partridge and Alex Lawson in The Guardian. De La Rue has produced three profit warnings and seen its stock slide by 62% in the past year. Activist investor Crystal Amber Fund had tried to force Loosemore out on two previous occasions.

De La Rue’s management is blaming the company’s predicament on the fact that “demand for banknotes around the world is at its lowest level in 20 years”, says Noor Nanji on the BBC. Part of this is due to the fact that during Covid many central banks “stepped up orders for bank notes during Covid as they always did in economic crises”, which means that “they were now delaying new orders as they ran through their stock”.

The hope is that things will pick up in nine to 12 months. But De La Rue also admits the firm has been hit by the fact that people’s use of cash is on the slide in many nations, as online and contactless transactions have become more popular.

De La Rue’s management may claim that at least some of its problems are due to factors outside its control, such as “the postCovid banknote market” says Alistair Osborne in the Times. But then why has the firm hitherto insisted on making forecasts that many experts considered clearly “not achievable”? The fact that De La Rue is now in negotiations with lenders over “an amendment to its banking covenants”, while also asking the pension trustees to defer “£18.75m of deficit repair contributions”, does not suggest that it is “a

well-run group”.