De La Rue profits fall after Venezuela defaults

By Arthur L. Friedberg

Published: Jun 7, 2019, 10 AM

Venezuela’s inability to pay for the production of bank notes printed by De La Rue has contributed to a decline in profits for the British security printer.

Original images courtesy of Central Bank of Venezuela.

Recent political turmoil has created massive inflation in Venezuela, well over 130,000%.

Images courtesy of Central Bank of Venezuela.

De La Rue prints about a third of the world’s paper money and is the biggest bank note printer in the world. Nonetheless, the firm has been going through a rough patch lately.

Brexit or no Brexit, the British printing behemoth lost a contract to print British passports, worth £490 million ($620 million), to a French company; its chief executive office has resigned; and its profit last year fell by 78 percent.

The latter is due in no small part to the fact that the firm has had to write off £18 million ($22.75 million) because the Central Bank of Venezuela could not pay the bill for the printing of its bank notes. Even taking that into account, its profit was still £25.5 million ($32.2 million), but down from £113.6 million last year on sales of £564.8 million.

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Venezuela’s inflation rate was 130,060 percent in 2018 and its gross domestic product fell by 22.5 percent. Even though it has the largest oil reserves in the world, exports of its largest source of revenue have collapsed.

The notes De La Rue printed are so worthless in Venezuela that it is more profitable for holders to fold them into souvenirs than try to use them as money. And to make matters worse, sanctions imposed at the behest of the United States make it difficult for the central bank to transfer any money it may have.

De La Rue’s chief financial officer, Helen Willis, optimistically told the Financial Times, “We are in constant contact with the customer, they really do want to pay that debt.”

There is talk in financial circles that the firm may be susceptible to a foreign takeover. Possible candidates include Crane Currency, manufacturer of the paper used for U.S. paper money and France’s Oberthur Fiduciaire, who made an unsuccessful takeover attempt in 2010.

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