A Year of Pivot for RCM, as Bullion Sales Boom, But Coins Decline

The Royal Canadian Mint (RCM) has announced its financial results for 2020. Overall, sales were boosted by 74% due to booming demand for gold bullion products. However, the increased revenue was matched by increased costs, so did not result in a corresponding increase in profit. Instead, profits were lower by 35% due to lower revenues from other parts of the business, among them circulating coins.

2020 was described in the RCM’s annual report as a ‘The Year of the Pivot’. This was reflected in the rapid readjustment to meet the 100% increase in demand for gold bullion and 30% increase in silver bullion as people turned to the precious metals as a secure investment. At the same time, the RCM suspended production for a period and put in place various pandemic measures (which resulted in it being named Canada’s safest employer in 2020).

Revenue for the year was $2.52 billion, up by 74%. Consolidated profit before income tax and other items was $27.5 million, down by 35%.

Sales of numismatic products fell by 21% to $91.9 million, due primarily to the temporary suspension of numismatic product production.

Revenue from the Foreign Circulation business decreased by 2% to $64.2 million, with production and/or shipments of 838 million coins and blanks in 2020, compared to 1.3 billion coins and blanks in 2019. In 2020, the Mint was awarded six new production contracts for an aggregate of 1.48 billion coins.

Revenue for the Circulation business was down by 8% to $88 million. 1.9 billion coins were supplied to the Department of Finance and to financial institutions – provided by a combination of recirculated, recycled and new coins, all of which the RCM manages. 229 million new coins were produced, compared with 385 million the previous year.

According to Marie Lemay, CEO of the RCM, over the spring and early summer, the pandemic had an impact on how Canadians paid for goods and services. In the early months of the pandemic, there was a sudden decline in the use of cash across the country, with requirements for new coins rebounding through the summer and fall.

‘This accelerated decline highlighted the unique and valuable service the Mint provides to Canada and Canadians in support of trade and commerce through its Coin Circulation Management System’, she said. ‘The valuable data, knowledge and insights gained from the Mint’s real-time inventory management system will support a seamless transition as Canada and Canadians move to a ‘cash-light’ economy and will help Canada be well-positioned for resilience in the event of a natural disaster or the widespread outage of e-payment systems’.

Operating expenses increased by 4% to $98.5 million as the Mint ‘focused on enhanced organisational resiliency in 2020 and the development of its strategy for the Mint’s future business transformation’.

This new strategy – ‘One Mint’ – is intended to enable the RCM to be more agile and capitalise on evolving market trends by breaking down its four traditionally siloed business lines (numismiatics, foreign coins and blanks, Canadian coins and services, and bullion) into two collaborative areas of focus: precious metals and circulation.

Strong start to current year

Shortly after publishing its annual report, the RCM the published its first quarter results for 2021/22 – which, with sales up by 81% and consolidated profit by an impressive 300% compared with the first quarter of 2020/21 – showed a very strong start to the year.

Bullion continued its trajectory – with sales up by 65% compared with the first quarter of last year.

Sales in the numismatics business were up by nearly 50%, helping make up for the lost sales last year.

The Foreign business did particularly well, with sales up by 162%. Sales in the Circulation Coin business for Canadian currency also did well.

‘The Mint’s strong performance in the first quarter is a testament to the dedication, resilience and flexibility of its employees,’ said Ms Lemay. ‘Throughout the COVID-19 pandemic, the Mint has continued to prioritize the health and safety of its employees while ensuring that critical services it provides to the essential mining and financial sectors continued uninterrupted. In the shadow of its pandemic response, the Mint began implementing a new long-term strategy, laying the groundwork for sustained profitability in the years to come’.