Profits fall at Dignity as market needs shift

by | Mar 31, 2023

Funeral and end-of-life service provider Dignity reported a 0.1% increase in market share in its preliminary results on Friday, to 11.9% in funeral services, and a 0.5% increase to 11.8% in cremation.
The London-listed firm put down the slower market share growth than originally expected to recruitment challenges and new competition.

Dignity’s underlying operating profit decreased 68% to £17.9m for 2022, while underlying cash generation fell 50% to £44.1m.

The company put the decline down to changes in pricing strategy, a trend towards lower-priced funerals, and various cost pressures, some of which it was having to absorb directly.

It said iti had also seen improvements in its recruitment challenges since increasing employee remuneration in some areas.

A total impairment of £196.3m of its non-current assets was included, following slower funeral market share growth and more branch direct cremations rather than full adult funerals being performed than originally expected.

That led to an operating loss of £201.1m for 2022.

The group had started a process over the potential sale of seven crematoria as agreed with bondholders.

It also noted that the recommended offer for Dignity at 550p per share by Yellow SPC Bidco remained ongoing, and subject to FCA change-of-control approval and shareholder acceptance.

As part of its contingency planning processes to ensure an appropriate capital structure and capital to invest in the business going forward, the board said it was still reviewing all options, including the possible need to raise equity finance to reduce its debt and improve its capital structure.

“Throughout a challenging year we have remained focussed on our long-term aims and have confidence that our strategy will deliver sustainable growth and the highest standards of care and service to our customers,” said chief executive officer Kate Davidson.

“We have a continuous emphasis on growing our market share across each of our businesses, and a commitment to ongoing investment in our people, facilities and infrastructure to unlock Dignity’s long-term success.

“We look forward to meeting the challenges of a regulated funeral sector, which we have long called for, and just one example of this is our preparation for the FCA’s consumer duty, which puts our customers first by setting out higher standards of governance and consumer protection.”

At 1058 BST, shares in Dignity were down 0.75% at 530p.

Reporting by Josh White for

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