Saturday 15 December 2018

Dignity shares soar as death rate rises and performance beats expectations

The funerals group reported earnings of around £37.5 million, in line with the prior year.

Elderly stock – London
Elderly stock – London

By Ravender Sembhy, Press Association City Editor

Dignity shares rocketed on Wednesday after the funerals firm said earnings in the first quarter came in “significantly” ahead of expectations.

The under-pressure group, which has been embroiled in a price war, booked sales of £95 million in the period, up from £93 million last year.

Dignity reported earnings of around £37.5 million, in line with the prior year, but well ahead of what the board had pencilled in.

Shares soared more than 20% on the news.

Last month Dignity warned that it was seeing lower-than-expected take-up of its “no frills” funeral option, despite slashing prices. 

It has also called in management consultants LEK to help lead a revamp to fight off increasing competition.

But the firm said on Wednesday that “simple funerals” only accounted for 15% of all funerals, lower than the 20% originally anticipated by the board, indicating demand is still strong for its premium option.

It added that the first seven weeks of the year saw a 7% rise in the death rate and 8% over the quarter as a whole to 181,000, which helped boost its performance.

As a result, based on its first-quarter results, Dignity believes that full-year results will be ahead of current market expectations.

Nevertheless, the firm struck a cautious note.

It said: “Despite this positive start to the year, the board still believes it is too early to conclude that the trading experienced in quarter one is indicative of the likely funeral price/volume mix going forward, and 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.

“The board continues to believe that trading during 2018 will be volatile.”

Press Association

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