UK funeral services firm Dignity Plc (LON:DTY) saw its shares almost halve today after the funerals group told investors that while results for 2017 will be in line with expectations, it cautioned over its 2018 performance.
The FTSE 250-listed group said its pre-arranged and crematoria businesses are performing strongly but also noted a continuing acceleration of price competition facing in the funeral business.
READ: Dignity slumps as the funeral operator warns on 'significant' competitive pressures
Consequently, the company said it is now taking decisive action on its pricing strategy, in order to protect market share and “repositioning for future growth”.
Dignity said results for the year, to 28 December 2018, will be “substantially below the market's current expectations.”
A price of a simple funeral will reduce by an average of 25%, meanwhile, the group’s traditional funeral service will see a price freeze in the majority of locations.
In light of these actions, Dignity now intends to embark on a rigorous review to ensure that its funeral operations are organised to run more efficiently and effectively.
READ: UK funeral firm Dignity reports first half profit and revenue growth as number of deaths rise
“The board believes that the combination of ongoing albeit slightly reduced volume erosion; the freeze in the traditional funeral pricing; the reduction in the simple funeral price; the likely change in mix; the increasing proportion of funerals that have been pre-arranged and increased promotional expense, will lead to substantially lower profits in 2018,” the company said in a statement.
“The new balance between volumes and margins will take time to become clear and the group expects to provide an initial update on these estimates and its progress when it releases its interim results in August 2018.”
Around 3pm, Dignity shares were down 47%, or 917p to 999p.
-- Adds share price --