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Banknote maker De La Rue has said that demand for currency around the world is at its lowest level in 20 years.
The company, which designs a third of banknotes globally, said demand for cash had fallen since the pandemic when central banks stocked up on currency.
It said the downturn would hit its full-year profits, which are set to fall short of expectations.
The firm is having to renegotiate its loan agreements with its banks due to the tougher trading conditions.
“The demand for banknotes has been at the lowest levels for over 20 years, resulting in a low order book going into fiscal year 2024,” De La Rue said in a trading update.
Its boss, Clive Vacher, told the BBC that central banks had stepped up orders for bank notes during Covid as they always did in economic crises. But they were now delaying new orders as they ran through their stock.
“They always do that when there are crises, because of the security that having cash around them has,” he said.
“So we expected a downturn, which has indeed happened, but that downturn is probably extending deeper and probably for an extra 9-12 months than we’d normally expect in the normal cycle of things,” he said.
It comes as consumer use of cash is in decline in many countries as more transactions are made online or with cards, and particularly contactless payments.
De La Rue said there are signs of recovery but is not sure when that will happen. Shares in De la Rue fell by as much as 30% on Wednesday after it published its trading update.
The 200 year-old firm said it was in talks with its banks over its loan agreements because of lower profits and higher interest rates, following a succession of rises by the Bank of England.
De La Rue now expects its full-year profit to be in the “low £20m range” while the interest costs on its loans has risen.
It said it is “in discussions with its lending banks in relation to seeking an amendment to its banking covenants, reflecting the revised outlook and also reflecting the increase in the company’s funding costs resulting from higher Bank of England base rates”.
De La Rue employs 1,800 people globally and works with 140 countries.
All current Bank of England banknotes are printed by the firm at a site in Debden, Essex.
The scene inside the De La Rue banknote printing hall is a mixture of the mundane and the surreal.
The factory floor feels very familiar with hi-tech machinery, pallet carriers and staff that appear typical of many production centres.
But the “product”, as it is called, turns your head. Millions of banknotes, in various stages of production, are here. Obviously, the security is extremely tight.
So many banknotes printed every day feels at odds with our everyday lives – when, for many people, cash use is a rarity as we pay for goods and services with cards and smartphones.
De La Rue is also printing the new banknotes featuring the image of King Charles, although those will not enter circulation until the middle of next year.
The company, which is headquartered in Basingstoke, Hampshire, has contracts with central banks around the world.
For some of those banks, it prints money, while for others, it provides polymer for banknotes well as other services.