Dignity hit by drop in deaths, warns over full-year profit
Funeral services provider Dignity posted a drop in first-quarter profit and revenue on Monday following a drop in the number of deaths, as it warned over its full-year profit.
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In the 13 weeks to 29 March 2019, underlying operating profit fell 42% to £21.7m as revenue slid 15% to £81.1m and the number of deaths declined 12% to 159,000.
This meant that underlying profit in its funeral division was hit the hardest, slumping to £18.4m from £27.9m in the same period a year ago. In the crematoria division, profit fell to £10.9m from £13m.
The company said its funeral market share continued to show a positive response to its updated service offering and new price points introduced last year. The group performed 19,200 funerals in the first quarter compared to 21,400 in the corresponding period last year, giving a market share of 12% versus 11.7% in Q118.
Dignity pointed out that according to historical data over the last 20 years, the final volume of deaths is likely to be within 3% of the previous year. If deaths were 580,000 (approximately 3% lower), then all other matters being equal, underlying operating profits for the full year could be approximately £3m to £4m lower than originally anticipated, it said.
"Clearly, this would require a significant increase in the number of deaths compared to last year in the second half of the year and would result in the financial performance for the year being more heavily weighted towards the second half of the year."
Chief executive Mike McCollum said: "Our primary focus for 2019 remains the execution of our transformation programme, which seeks to build a more coherent, cohesive and technology-enabled business, geared to meeting the changing needs of our customers, whilst remaining focused on excellent client service. This will deliver our vision to lead the funeral sector in terms of quality, standards and value-for-money.
"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."
At 0910 BST, the shares were down 6.7% at 631p.