Bell tolls for funeral firm facing competition probe

ShareS in the funeral firm

Dignity took a dive as the competition watchdog announced it was considering a major probe into the industry.

The Competition and Markets authority ( CMa) launched a study into the funerals sector six months ago. Its interim report yesterday accused Dignity of making too much profit, taking advantage of grieving customers.

Families generally spend between £3,000 and £5,000 organising a funeral, it found, and the price of the essential elements has increased by more than two-thirds over the past decade. Of the UK’s 20 most expensive crematoriums, 19 are operated by Dignity.

andrea Coscelli, chief executive of the CMa, said: ‘People mourning the loss of a loved one are extremely vulnerable and at risk of being exploited. We need to make sure that they are protected, and we’re very concerned about substantial increases in funeral prices over the past decade.’

The CMa now wants to complete a full investigation, which will involve industry experts analysing what can be done to improve the funerals market.

But for investors who benefited from strong profits between 2014 and 2017, the review spells bad news. Over those four years, the CMa found, Dignity’s earnings margins were much higher than those of its peers Co- op and Funeral Partners – and all its margins were higher than most competitors abroad.

Dignity’s shares are worth 66pc less than they were two years ago, after it said last November that it was seeing increased price competition and added in January it would have to shake-up its business. Nonetheless, brokers have widely believed it will still thrive.

But Peel hunt has downgraded its recommendation for investors from ‘ hold’ to ‘sell’, saying the CMa cut a more strident tone than expected. Shares plummeted by 15.8pc, or 159.5p, to 847.5p.

The FTSE 100 ended the day up 0.5pc, or 34.43 points, at 7038.95, with equipment hire company

Ashtead boosting the index, up 3.9pc, or 68p, to 1795.5p.

Investors were heartened at boss Geoff Drabble’s resignation, as he will hand over the role of chief executive to chief operating officer Brendan horgan in May.

Drabble, at the helm for 12 years, has presided over a sliding share price. equipment firms are vulnerable to signs of cooling in the property and construction markets, and it seems investors hope horgan will bring new ideas.

Train company Go-Ahead gained 6.8pc, or 105p, to 1656p, as it said it was improving performance at Govia Thameslink. Passenger numbers and revenues were rising in its regional bus division, showing a return to growth, and it won another rail contract in Norway.

Between July 1 and November 28, revenue was up 3pc compared to a year previously and passenger journeys rose 1.5pc. analysts at Liberum called the update ‘ encouraging’, but warned it remained to be seen how sustainable bus division growth was. Webuyanycar owner BCA

Marketplace edged higher by 0.7pc, or 1.5p, to 222.5p, as revenue climbed 22pc to £1.4bn and operating profit jumped 23.7pc to £50.6m over the six months ending in September.

Insurance firm Phoenix Group lifted slightly, by 0.9pc, or 5.5p, to 606.5p, after it said its £3bn acquisition of Standard Life assurance was progressing well.

Paypoint, which allows small stores to process payments and runs the Collect+ parcel pick-up points in corner shops, saw revenue jump 8.7pc to £106.1m.

Its shares climbed 7.2pc, or 57p, to 852p as it said its partnership with ebay had helped make Collect+ the ‘go-to’ delivery service.