Fewer deaths contribute to 60% fall in profits at funeral provider

Pre-tax profits dropped 61% at funeral provider Dignity as the number of deaths remained at a lower-than-expected level.

There were 24,000 fewer deaths than a year earlier which had a big impact on the financial performance of the Sutton Coldfield-based company.

Dignity is one of the UK’s largest funeral providers, managing around one in eight of all funeral services.

The number of deaths nationally was down 7% while Dignity’s revenues fell 12%, to £153.3m.

The funeral sector has been affected by increased competition and lower prices in the last two years.

Separately, the Competition and Markets Authority is investigating the funerals and crematoria sector – a move that was welcomed by Dignity – examining how customers are treated at a time when they are vulnerable to anti-competitive practices.

Mike McCollum, chief executive of Dignity, said: “While the number of deaths in the first half meant that our financial performance for the period was lower than originally anticipated, we remain confident that the changes we are introducing will generate sustainable growth in the medium to long-term.

“Longer-term expectations, based on the ONS forecasts remain unchanged, with increases in the long-term number of deaths, reaching approximately 700,000 per year by 2040.”

The group embarked on a transformation plan last year in response to significant disruption and price pressures in the sector.

McCollum said: “Building on the momentum and significant progress already made in the past 12 months, our transformation plan is now entering a new phase. In the second half of the year we will begin transforming our branches, starting with a three network pilot programme. As the board always anticipated, the transformation of our branches will be radical, complicated and challenging.

“We have over 800 branches, with each network reflecting a range of differing local and historical approaches. Our staff will be working in materially different ways and we fully expect there to be refinements during the piloting process which is likely to take a number of months. We are committed to ensuring that the design of our branch model is right before we embark on what will be a careful roll-out across the entire network, which we expect to start in 2020.”