Dignity PLC (LON:DTY) reported a 38.6% drop in underlying operating profit for the third quarter as the funeral company undergoes a restructuring of the business to better contend with fierce competition.
Underlying operating profit fell to £12.2mln in the 13 weeks to September 28 from £19.9mln a year ago, reflecting restructuring costs and lower profits in the pre-need division. Revenue rose to £244.2mln in the first 39 weeks of the year from £243.9mln last year as the number of deaths increased to 455,000 from 440,000. The group expects deaths will rise to 600,000 deaths for 2018 as a whole.
The group conducted 55,700 funerals in the year to date, up from 52,100 last year, representing a market share of 12.1%. It performed 49,900 cremations in the period, compared to 48,100 last year, representing a market share of 11%.
In August the group announced a shake-up of the firm that included closing sites, separating its front and back-office operations, cutting jobs and improving its digital services.
READ: Dignity shares buried as Co-op sparks funeral price war with pledge to beat competitor quotes
The company also lowered the cost of its basic funeral by about 25% in January in a bid to match the Co-op funeral service.
It has trialled unbundling its full-service funeral pricing so customers don’t have to buy a whole package from the firm but this move resulted in lower average income in the third quarter.
Dignity expects average income will be lower in the fourth quarter but said it continues to perform in line with current market expectations for the year ended 28 December 2018.
“We are pleased with how the group has performed in the period and following these results our expectations for the full year remain unchanged,” said chief executive Mike McCollum.
“Our work on the transformation plan is critical and we are encouraged by the progress that has been made in the initial weeks.
"Alongside the expansion of our digital offerings, we continue to provide a greater choice for consumers and our focus on high standards and excellent client service remains central to our plans for the future."
Shares fell 3.9% to 1,002p in morning trading.