Dignity looks to restore lost confidence
The UK’s only listed provider of funeral services looked to restore confidence in the business today after a profit warning saw the value of the company cut by half.
Dignity revealed on Friday that it was slashing the cost of its basic funeral package by 25% in response to an ongoing price war in the market.
However, it warned that the move would substantially impact profits this year – a move which panicked investors, resulting in shares in the Sutton Coldfield business falling by half and seeing the value of the business cut to £497m.
Trading was a little more stable today but an initial surge in the share price of 17% proved to be shortlived. However, trading remains positive.
There were 590,000 reported deaths for 2017 and the group conducted 68,800 funerals. Of these, approximately 60% were represented by traditional full service funerals at an average income of £3,800; 7% were simple funerals at an average income of £2,700; and approximately 27% had been pre-arranged and the group received an average income of £1,650.
The remainder of the group’s volumes were contract and other low value funerals with an average income of £500. In each case, these amounts excluded disbursements. In addition, the division generates ancillary revenues equating to approximately £280 per funeral which the group said were not expected to change materially.
Effective immediately, the group’s simple funeral has been cut to £1,995 (plus disbursements) in England and Wales and £1,695 (plus disbursements) in Scotland.
“As a result of reducing the simple funeral price and other initiatives to be introduced during the year, it is likely that the mix will change,” said Dignity.
“The group currently anticipates that as a result of changes to the pricing strategy, simple funerals may represent approximately 20% of all funerals performed in 2018.
“However, this is an estimate and the precise mix will become clear during the year and be a key element in what will be an evolving pricing strategy.”
It said the Office for National Statistics anticipates approximately 580,000 deaths in 2018.
In order to promote the new prices and the business generally, the group said it expected to spend an additional £2m in 2018 on digital and other promotional activities, building on the work started in 2017.
“In a fragmented and increasingly online marketplace the group has a tremendous opportunity to leverage its existing physical national funeral and crematorium networks and create a powerful national digital presence in both its traditional premium service market and also other emerging market segments,” it added.
It has said it will look to maintain its acquisition programme and build its network of crematoria.
