Funeral provider rallies after difficult first half

Funeral provider Dignity’s performance in the third quarter of the year has stabilised after a difficult first half for the Sutton Coldfield-based firm.

The performance was driven by the number of deaths returning to expected levels, up 1% to 132,000 in the third quarter.

Dignity, one of the UK’s largest funeral providers, managing around one in eight of all funeral services, reported underlying operating profit of £11.2m for the 13 weeks to the end of September, down just £1m from £12.2m for the corresponding period last year.

In the first six months of 2019, its underlying operating profit was down by £19.7m.

The company said: “The board’s expectations for 2019 remain unchanged from the time of the interim results in July. Operating performance in 2020 will rely heavily on the number of deaths, which may or may not revert to higher levels witnessed in previous years compared to the 576,000 seen in the last twelve months to September 2019.

“In addition, following the appointment of Clive Whiley as chairman, the board is also reviewing its current strategy in the context of the current challenges within the industry.”

Based on updated data released in October 2019, the Office for National Statistics has increased its forecasted number of deaths from 2020 by approximately 20,000 per year, increasing from approximately 600,000 in 2020 to approximately 740,000 in 2040.

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.

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

Mike McCollum, chief executive of Dignity, said: “I am pleased with the group’s progress so far this year. Although deaths are lower, market share remains robust, the transformation plan remains on track and our journey to build a more modern technologically enabled business that offers clients a high-quality service at a variety of price points remains firmly intact.”