Funerals group sees fewer people dying
A sharp decline in the number of people dying should be a cause for celebration – but it led to a fall in profits at one funeral provider.
Funeral provider Dignity has warned its investors that a 22,000 drop in the number of deaths in the UK so far in 2019 could hit the company’s performance.
Shares in the group – the UK’s only listed funerals chain – dropped seven per cent as it said underlying operating profits tumbled 42 per cent to £21.7 million in the 13 weeks to March 29 after the number of deaths dropped around 12 per cent 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 three per cent lower overall, at some 580,000.
But it cautioned that even a three per cent 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.”
Dignity has crematoria at Kidderminster, Lichfield, Shrewsbury and Telford, and runs the West Midlands funeral home chains Jennings and F W Collins.
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 per cent drop in sales to £81 million over its first quarter, although its market share grew to 11.8 per cent from 11.6 per cent a year earlier.
Dignity cut the prices on several of its packages last year, with the “simple funeral” price reduced by 25 per cent 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.