uneral provider Dignity has posted a sharp decline in both revenues and profits as widespread Covid-19 vaccine uptake leads to a decline in deaths.
Dignity’s underlying operating profits fell 67% to £9 million in the first quarter and revenues dropped 22% to £73.9 million.
The company attributed its troubled performance to the lower number of deaths and lower average revenues per funeral, following a move to more competitive pricing in September 2021. The number of deaths across the UK dropped by 19% to 166,000 in the first three months of the year.
Dignity admitted that its operating performance in the first quarter was “weak” due to the lower number of deaths than the corresponding period last year. The group conducted 21,200 funerals in the first 13 weeks of the year, down from 23,800 last year.
Chief executive Gary Channon said the pandemic had made year-on-year comparisons difficult.
“The combined effect of the drop in the death rate following the pandemic during a time of strategic change for the group is what we were protecting against when we sought and agreed the deal with our bondholders,” he said.
The company has grown market share at the cost of average revenue per funeral, Channon added.
Peel Hunt said: “It is too early to tell whether this is sustainable, as share in the short term can be distorted and competitors may well respond to Dignity’s more aggressive price position.”
Investec flagged “a number of factors that make forecasting challenging, particularly the impact of Covid-19 over the previous two years, whilst the outlook is also clouded by the group’s stated intention to address its current capital structure.”
In April last year, the chairman of Dignity was ousted in a coup led by the company’s biggest shareholder. Dignity said 55% of votes cast by shareholders backed a motion to remove Clive Whiley as a director.
Shares fell 41p to 459p this morning.
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