The Royal Canadian Mint recently issued their 2012 Annual Report. I have previously provided a summary of overall results in this article. For this post, I wanted to specifically explore aspects of their numismatic segment which delivered stellar performance, achieving the highest revenue in the Mint’s history.
The recent success of the RCM’s numismatic segment is clearly no accident. The results are driven by an increase in product offerings which span a wide range of price points, low mintage levels which foster frequent sell outs, and targeted initiatives which have been very successful at attracting new customers. On top of these strategic factors are well conceived, often exceptionally designed, and frequently innovative coins which capture the enthusiasm of a growing base of collectors.
The numismatic and collectibles segment recorded revenue of $145.1 million for 2012, representing an increase of 56.02% compared to the prior year. The growth in this segment was in contrast to a decline of 22.11% for bullion and refinery (by far the largest segment by revenue), an increase of 11.56% in circulating coinage, and a decline of 10.88% in foreign coinage.
Although the RCM does not provide specific figures, bullion and foreign coinage are low margin segments, whereas the numismatic segment presumably delivers much higher margins. Therefore the growth in numismatic sales may have been key in preserving overall profit levels for the year. Despite a decline of more than $500 million in overall revenue, net income fell by just $3.1 million compared to the prior year.
A breakdown of numismatic revenue by region shows 76.9% from Canada with the remaining 23.1% from other countries. Growth occurred across all regions with the strongest growth in the Asia-Pacific region and the US.
During 2012, the RCM offered 136 new products. This was the most ever introduced in a single year. The RCM mentioned a “fresh focus on the customer” and “precisely targeted offers”.
More than any other Mint, the RCM seems to target the entire spectrum of demand for numismatic products from low price clad offerings to numismatic luxury items like 5 kilo silver coins and 1 kilo gold coins. The RCM also issues numismatic coins which cover a broad array of topics, ranging from dinosaurs to plants, from Canadian sporting events to anniversaries of international interest such as the Titanic centennial. Finally, in addition to more traditional gold and silver offerings, the RCM has offered innovative coins including those incorporating multiple finishes, using non traditional metals such as niobium, using glow in the dark technology, Venetian glass, Swarovski crystal elements, diamonds, holograms, colorization, and more.
While not every product will appeal to every collector, most collectors should be able to find something within their sphere of interest.
Of the 136 products released in 2012, 60 achieved a sell out. This was a new high and more than double the previous record. The RCM clearly views sell outs as strategically important and formulates pricing and mintage levels with certain targets in mind. From the annual report: “Sellouts are also important because they increase the secondary market value of our products and drive customers to our dealer and distributor partners thus supporting the business line aim of sustainable growth across all channels.”
During the year, the volume of numismatic coins increased by 89.5% to 3.6 million pieces. The number of transactions increased 75.7% to 599,000, reflecting substantial growth in the Mint’s customer base.
The RCM shared some insights into their popular Exchange $20 for $20 Program, which has offered silver coins with a legal tender value of $20, priced at their face value. One of the goals of this offering seems to be to attract new customers, where it has clearly found much success. According to the annual report, the program was responsible for capturing approximately 67,000 new customers and a great deal of these went on to become repeat customers with 49.1% making a second purchase.
Looking ahead, the RCM states that they plan to issue over 200 new products in 2013. This will include coins made with niobium and holograms. Further comments included:
“The Mint is committed to building the market for numismatic products by offering themes and designs with wider commercial appeal at affordable price points.”
“The Mint also remains committed to supporting secondary markets by balancing pricing and mintages to sellout about one-third of the numismatic coins issued.”
A pdf copy of the full Royal Canadian Mint 2012 annual report can be found here.