Post-Covid decline in death rates and regulatory shake-up hits funeral firm Dignity as revenues fall by a fifth
- It said death numbers tumbled by 19% to 166,000 over the quarter
- This resulted in its underlying operating profits sliding 67% to £9million
- Follows agreement with investors to waive the financial covenants on bonds
Funeral firm Dignity saw revenues fall by 22 per cent to £73.9million, compared with the same period last year, due to a ‘drop in the death rate’.
Shares in the Birmingham-based business slumped after it said UK deaths in the three months to March were below their average over the past five years as Covid-19-related deaths reduced.
It said death numbers tumbled by 19 per cent to 166,000 over the quarter, resulting in its underlying operating profits sliding 67 per cent to £9million.
Funeral firm Dignity saw revenues fell by 22% to £73.9 million, compared with the same period last year, due to a ‘drop in the death rate’
Dignity shares were trading 8.5 per cent lower at 457.5p at 11am.
Its performance was also affected by lower average revenues per funeral after the company reduced its pricing in September 2021 amid regulatory scrutiny of the sector.
Nevertheless, the company grew its market share in funerals and cremations.
It comes after the firm sealed an agreement with its bondholders earlier this year to waive the financial covenants on its bonds.
Overall the group, founded in 1994, said it performed 21,200 funerals in the first 13 weeks of the year compared with 23,800 during the same period last year.
Meanwhile, it conducted 20,800 cremations compared to 22,600 in the first quarter of 2021.
As part of its ‘strategic overview’ the firm closed a number of central departments in January which resulted in a number of redundancies.
It has also suspended to some of its marketing and digital activities as part of the cost-cutting measures.
Commenting on the results Dignity CEO Gary Channon said: ‘Whilst the impact of the pandemic has made year-on-year comparisons difficult, the early signs of our new strategy are coming through.
‘Increased competitiveness is showing up in across-the-board growth in market share at the cost of average revenue per funeral.
‘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.
‘That gives us the ability to pursue the right long-term strategy whatever happens to the death rate this year.’