Investors respond strongly to Dignity’s upbeat update

Funeral provider Dignity enjoyed its best day on the stock market for 12 years, with an intra-day rise of 23%, after investors responded overwhelmingly positively to its financial performance.

Despite the company’s efforts to play down its performance, with caveats about volatile and uncertain trading, its update which said it was on track to deliver better-than-expected results this year has enthused the market.

Although it share price fell back during the day, it closed up 11% at 1,037p, adding around £50m to its market value.

The Sutton Coldfield-based company had attributed a strong first-quarter performance to a higher-than-usual death rate and changes to its product mix, with its reduced price offer having less impact on its profits than it had expected.

Today’s share price jump repairs some of the dent it suffered in January, when its shares fell 50% in a day after it warned of the impact on its own business of a price war in the funerals market.

Its first-quarter revenue was £95m, compared to £93m a year ago, while earnings before interest and tax was approximately £37.5m. This was in line with the prior year, but significantly ahead of the board’s expectations.

In a statement, Dignity said: “The group continues to conduct a significant number of price and service trials across its entire portfolio.

“The data from these trials is still at a very early stage and it is not yet possible to draw any meaningful conclusions.”

It also warned that it expected trading this year to be “volatile as the relationship between funeral price, service and volume would take time to settle down”.