Funerals firm Dignity to report results after fall in Covid deaths

Dignity’s revenue depends on two variable factors – the number of deaths and how elaborate people want funerals to be – and it is these measures which will draw investors’ eyes on Tuesday when the company reports its first-half results.

But shareholders will also be looking for signs of the new Dignity – the firm was taken over in an investor coup earlier this year and has promised a new direction.

The last time shareholders were able to peek behind the scenes was in June, when Dignity released a trading update ahead of its annual general meeting.

At the time the Covid-19 vaccine rollout in the UK had one obvious impact on the company and the sector as a whole: deaths were falling.

In April and May 7% fewer people died than the average for the five years before the pandemic, Dignity said at the time.

As for any funeral company, fewer deaths mean fewer customers.

However, after months of lockdown restrictions, grieving relatives were starting to spend more on saying goodbye to their loved ones.

Last year around 63% of those choosing between a full or simple service chose the more expensive option. This increased to 68% in April and May, Dignity said.

Coronavirus death rates remained low in June, although they rose slightly from May levels, according to data from the Office for National Statistics.

This year Dignity’s pre-tax profit is expected to drop from £30.7 million to £29.7 million and revenue from £314.1 million to £303.5 million.

But shareholders will also be looking beyond the results to the company’s future.

In April, Dignity’s chairman was ousted in a boardroom coup orchestrated by Phoenix Asset Management, which had built up a 30% stake in the business.

In June, the business laid out a new strategy which it hopes can help capture 20% of the funeral market in the next 10 years, compared with the current 12% share.

This involves a higher priority on selling funeral plans through branches, rather than relying on call centres.

Dignity has cancelled five contracts with outside call centre companies, saving £12 million in 2021 alone. However, it will also have an impact on revenue from the company’s funeral plan division, which is expected to drop by 35% this year.