Dignity returns to profit as funeral spending rises

LISTED funeral business Dignity has swung back to a profit after the easing of Covid lockdown restrictions meant more attended funerals could take place.

A new pricing strategy meant revenues fell in 2021 from £314.1 million to £312 million but pre-tax profits hit £32 million, compared to a pre-tax loss of £19.6 million in 2020.

But restrictions at the start of 2021 continued to impact upon the Sutton Coldfield-based business.

In an update to the stock exchange, it said: “Restrictions in client choices due to Covid-19 continued to adversely impact average revenue as clients opted for simpler funerals during the first half of 2021.”

There has been an improvement since restrictions were removed but Dignity warned the end of Covid could hit the business as death rates fall once the pandemic subsides.

The funeral sector has seen a huge spike in business due to the number of excess deaths but has been unable to cash in on additional services because restrictions banned large gatherings.

Dignity revealed, for example, that with the end of restrictions, sales of flowers and memorials increased per funeral to £154.

The company said: “The biggest factor affecting us is likely to be the death rate and there is a real risk that, after Covid-19 passes, the excess death effect of the past two years starts to reverse itself which it will do at some point.”

With the rollout of the Covid-19 vaccine, deaths in 2021 were 14,000 lower than 2020, the company added.

Dignity spent the year implementing changes to the business ahead of new regulations introduced by the Financial Conduct Authority for the pre-paid funeral plan market.

And interim chief executive Gary Channon set out his plans for the company’s future as Dignity saw its chairman ousted last year in a boardroom coup.

He said: “2021 was a year of great change at Dignity as we set out and started implementing the new strategy which, at its core, promotes a culture focused on serving families and communities in all their end-of-life needs.

“There isn’t a part of Dignity that hasn’t been affected by the transformation so far as we inverted the whole organisation, empowered those serving clients and organised ourselves in a more collaborative structure.”

Part of the strategy is to reduce prices to stem the fall in market share Dignity has seen in recent years.

Bosses hope this will lead to growth in the number of funerals being carried out by Dignity across its 776 funeral homes and boost profits by volume.

During 2021, 79,200 funerals were held, down from 80,300 in 2020.

Chairman John Castagno said the search for a permanent chief executive remained under way, adding he hoped to make an appointment soon.

Mr Channon was installed last year after Dignity’s biggest shareholder Phoenix Asset Management urged investors to oust former chairman Clive Whiley.