The National Treasury’s earnings from the joint venture between Kenya and British security printer De La Rue fell by 25 percent to £0.9 million (Sh132 million) in the year to March 2022, after the unit’s overall profitability fell despite a slight jump in revenue.
Filings by the British firm show that the Kenyan venture—called De La Rue Kenya EPZ Limited—made a profit of £2.2 million (Sh323.4 million) in the review period, down from £3.1 million (Sh455.7 million) a year earlier.
Revenue rose by £1.1 million (Sh161.7 million) to £30.5 million (Sh4.48 billion) in the period.
The Treasury is entitled to a share of the local unit’s profit courtesy of its non-controlling interest of 40 percent that it acquired at a cost of £5 million (Sh735 million) in 2019.
The deal gave the government, the largest customer of De La Rue, an opportunity to recoup part of its currency printing expenses through profit-sharing.
It was therefore allocated £0.9 million (Sh132.3 million) from the profit out of which it received a dividend distribution of £0.2 million (Sh29.4 million). The payout halved from £0.4 million (Sh58.7 million) in the prior year.
De La Rue said that operating costs were higher in the period, partly due to lingering effects of the Covid-19 pandemic, hurting profitability despite the improved revenue performance.
“This performance was against the background of supply chain inflation, and the various impacts of Covid-19, none of which were anticipated in the original turnaround plan of February 2020,” said De La Rue chief executive officer Clive Vacher.
Shipping and material costs went up across the globe in 2021 due to pent up demand after countries eased their Covid restrictions, with De la Rue saying that it expects the higher supply chain costs to increase operating costs by an additional net of £5 million the current financial year which ends in March 2023.
On its Kenya site, De La Rue prints currency and documents for the government, and also for export to overseas clients.
It also operates similar joint ventures in Sri Lanka and Ghana, where it has ceded 40 percent and 51 percent to the respective non-controlling interests in those countries.
