Dignity swings to £48m loss as cremations hit by higher fuel costs

Funerals group Dignity has revealed it swung to a loss of nearly £50 million and is considering introducing a surcharge on cremation services to cushion the impact of higher fuel costs.

The group, which owns more than 800 funeral locations in the UK, said its revenues shrunk by £8.6 million as a result of the lower death rate.

There were almost 400,000 fewer deaths in the first three months of this year compared with the same period last year, due to the Covid pandemic, Dignity said.

It operated at a £48 million loss in the first half of the year, a big drop from the £41 million profit reported a year ago.

Dignity changed its pricing and introduced lower cost funeral options, such as direct cremations, which it said contributed to the decline in its profits and revenues.

Staff shortages have also impacted the company and it has more than 400 vacancies, it said.

This shortage led to a bigger gap between the time of a person’s death and their funeral service, which Dignity said has resulted in a loss of business.

Higher fuel costs impacted its cremation business and the firm said a potential option to offset higher prices would be a “fuel surcharge” across its cremation services.

Dignity would not comment on the details of the surcharge, but it is thought that this could result in more costly cremations. The firm said an announcement will follow if it opts to go ahead with the surcharge.

In July, the financial watchdog took over regulation of the funerals sector to hold firms to higher standards.

It published a list of 26 authorised providers, including Dignity, which it urged people to check if they were considering a pre-paid funeral plan.

Kate Davidson, Dignity’s chief executive, said: “Over the past few years our business has risen to the challenges presented by Covid-19.

“We have continued to deliver excellent customer service whilst also implementing our new strategy as well as preparing and achieving FCA (Financial Conduct Authority) regulatory approval for new funeral plan rules, whilst recognising the short-term adverse impact on our financial performance.”