Dignity unveils turnaround plan as profits hit by falling death rate
The firm said the number of UK deaths fell below the five-year average in April and May and were 7% lower.
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Funeral firm Dignity said profits have fallen amid a marked drop in UK deaths since April as the group’s new boss outlined his turnaround plans.
The group said that following a 27% surge in first quarter deaths to 204,000 during a Covid-hit start to the year, the number of deaths fell below the five-year average in April and May and were 7% lower.
This has left underlying operating profits “slightly” lower year-on-year at £30.7 million for the 21 weeks to May 21, according to Dignity.
The UK’s only listed funeral firm said average revenues per funeral improved on the first quarter, thanks to a small recovery in take up of what the company calls a “full service”.
It also said its share of the market had started to get back to normal and increased to 12% in May, having slipped to a lower-than-expected 11.5% in the first quarter due to the delay between deaths and funerals in the pandemic.
Shares in the group jumped 7% after the update.
The figures came as new executive chairman, Phoenix Asset Management’s Gary Channon, also unveiled his plans to turn the firm’s fortunes around, revealing the group had cancelled contracts with five call handling firms.
This came after the group found they were not cost effective and did not meet Dignity’s standards, with the firm now set to focus on funeral plan sales through branches instead.
Dignity warned the move would lead to the loss of around 35% of funeral plan division revenues, though it added this would largely be offset by £12 million of savings from the contracts being cancelled.
Mr Channon – who co-founded Phoenix – took charge of Dignity in April after its largest shareholder, Phoenix Asset Management, led a dramatic boardroom coup and ousted the group’s former chairman Clive Whiley.
Dignity, which is holding its annual general meeting on Wednesday, also set out aims to increase the firm’s funerals market share to 20% in 10 years’ time.
The company pledged to ensure its organisational structure is more “open and dynamic” and also said it would increase investment in standards of care, facilities and its estate, as well as competitive pricing.
It follows a lengthy probe into the funeral sector by the Competition and Markets Authority (CMA), which last December concluded that funerals were costing consumers too much and made a series of recommendations.
The watchdog ruled last week that funeral directors and crematorium operators must make prices clear for customers from mid September, or risk court action.
The Financial Conduct Authority is also set to regulate pre-paid funerals in 2022 following concerns about misleading and high-pressure sales tactics in the sector.