De La Rue eliminates 300 jobs on suspension of operations
Banknote printer De La Rue, which was recently ordered to pay the Kenya Revenue Authority (KRA) Sh1.1 billion will shed 300 jobs after suspending its printing jobs on low orders.
The UK-based company suspended operations in Kenya for the next 12 months but said the joint venture with the Kenya Government remains active. The government has a 40 per cent stake in the company which set up shop in Kenya in 1991 as part of an initiative to promote Kenya as a centre for international trade.
“Owing to current global market demand, and no expectation of new banknote orders from the Central Bank of Kenya for at least the next 12 months, De La Rue Kenya has suspended banknote printing operations in the country,” according to a statement posted on the company’s website. In addition to the Kenyan subsidiary, De La Rue has three other banknote printing sites in the UK, Malta and Sri Lanka.
The company said it was exploring further business opportunities, both in Kenya and for export from Kenya, with a view to restarting production if the economic climate permits.
The company started shading off its workforce in July last year. The retrenchment exercise is expected to wind up in March 2022.
At the end of September 2022, De La Rue had 2,190 employees who work with organisations in more than 140 countries, leveraging the group’s manufacturing facilities in the UK, US, Malta, Sri Lanka and Kenya.
De La Rue has had a long-running tax tiff with the KRA dating in 2013, when audit returns carried out by KRA indicate the company was not offsetting royalties paid to its parent company De La Rue International as an allowable expense under Section 15(1) of the Income Tax Act. The Kenyan subsidiary is preparing to appeal at the Court of Appeal. In the six months to September 2022, the Kenyan subsidiary’s profits dropped by 58 per cent to £0.5 million (Sh74 million), down from £1.2 million (Sh177.5 million) in the prior year.
The National Treasury earned £0.9 million (Sh133 million) in the full year to March 2022 from the joint venture, after the unit posted a profit of £2.2 million (Sh325.4 million).
Revenue from the subsidiary fell from £15.1 million (Sh2.23 billion) to £10.8 million (Sh1.6 billion), in line with a general decline in the parent’s earnings on the back of reduced demand for bank notes globally, amid supply chain constraints that added to costs.