Drop in deaths takes toll on Dignity
The group said underlying operating profits tumbled 42% to £21.7 million in the 13 weeks to March 29 after the number of deaths fell.
Funeral provider Dignity has warned over a hit from a 22,000 drop in the number of deaths so far in 2019.
Shares in the group – the UK’s only listed funerals chain – dropped 7% as it said underlying operating profits tumbled 42% to £21.7 million in the 13 weeks to March 29 after the number of deaths dropped around 12% to 159,000.
It said it is unlikely this rate of decrease will continue throughout 2019 and the number of deaths is likely to finish around 3% lower overall, at some 580,000.
But it cautioned that even a 3% drop would leave operating profits around £3 million to £4 million lower than expected and this result would also require a marked step up in the number of deaths over the second half of the year.
Mike McCollum, chief executive of Dignity, said: “Whilst the number of deaths in 2019 may mean that our short-term financial performance is lower than we originally anticipated, I am confident that the changes we are making will allow us to generate sustainable growth in the medium to long-term.”
The group gave assurances that long-term increases will see the number of deaths reach around 700,000 a year by 2040.
Dignity reported a 15% drop in sales to £81 million over its first quarter, while its market share grew to 11.8% from 11.6% a year earlier.
Dignity cut the prices on several of its packages last year, with the “simple funeral” price reduced by 25% and the no-frills option of direct cremation was extended.
The reductions came amid a price war between Dignity and its main rival The Co-operative Funeralcare, which in October extended its price guarantee to beat competitor quotes.
The group and the wider sector has been put under the microscope after the Competition and Markets Authority (CMA) launched an investigation into the funeral market in March, following concerns over high prices and the treatment of vulnerable customers.