Fall in number of UK deaths hits profits at funeral provider

Funeral provider Dignity has warned that its profits could fall short this year after a "significantly lower-than-expected number of deaths" in the first quarter.

The company said revenues of £81.1m were 15% lower than for the same period last year and underlying profits fell by 42% to £21.7m as the number of deaths fell 12% to 159,000.

Past data suggested the number would recover later in the year, Dignity added.

Even with a "significant increase" - where deaths for the whole of 2019 would be 3% lower than 2018 - profits at the company could be £3m to £4m lower than originally anticipated.

Shares fell 6% but recovered by the close to be just 2.2% lower on the day.

Dignity said: "Operating performance in the first quarter was below the board's expectations as a result of the significantly lower-than-expected number of deaths."

Chief executive Mike McCollum said: "Whilst the number of deaths in 2019 may mean that our short-term financial performance is lower than we originally anticipated, I am confident that the changes we are making will allow us to generate sustainable growth in the medium to long-term."

Dignity performed 19,200 funerals in the 13 weeks to 29 March, down from 21,400 a year earlier. But its like-for-like market share rose from 11.6% to 11.8%.

The company pointed out that the Office for National Statistics (ONS) expects long-term increases in the number of deaths, reaching approximately 700,000 a year by 2040.

Dignity cut prices on several of its packages last year, with its "simple funeral" fee reduced by 25%. Its no-frills option of direct cremation is increasingly popular.

It made about £190 less per funeral in the first quarter than in the same period last year.

The company is involved in a price war with its main rival, The Co-operative Funeralcare, which extended its price guarantee in October to beat quotes from competitors.

The wider sector is under the spotlight of the Competition and Markets Authority (CMA) after it launched an investigation in March following concerns over high prices and the treatment of vulnerable customers.