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De La Rue to slash banknote production by 25 percent

Increased competition, the rise of durable plastic banknotes and growth in cashless transactions account for decreased production demand.

December 2, 2015

De La Rue PLC announced plans to optimize its banknote manufacturing footprint as part of a five-year "Optimize and Flex" strategy, which involves:

• reducing banknote print capacity from 8 billion to 6 billion notes annually;
• cutting the number of production lines in half;
• consolidating banknote printing at facilities in the U.K., Kenya and Sri Lanka, and closing the Malta banknote center;
• focusing Malta production on identity and security documents.

According to a press release, the optimization effort will allow De La Rue to deliver "the right capability, capacity and cost base."

The company said that it will replace and modernize existing equipment as it halves the number of production lines from eight to four.

The restructuring will bring De La Rue's production capacity in line with current market demand, and "greatly enhance the efficiency and flexibility" of the group's banknote print business, the release said.

According to a Wall Street Journal report, the restructuring reflects recent changes in banknote demand:

[H]eightened commercial tendering, competition from state-run firms and an oversupply of notes with growing production across emerging economies has pinched prices for bank-note printers.

And in developed markets, rapid growth in cashless commerce as consumers buy more products and services online has also buffeted De La Rue. Growth in the use of plastic, rather than paper, banknotes has also weighed on De La Rue's business.