Not enough people are dying: that was the cheery message from Dignity PLC (LON:DTY) on Monday morning.
The funeral director warned that unless the number of deaths in the UK starts picking up, it would likely take a multimillion-pound hit to its bottom line this year.
The news sent the company’s shares down by more than 7% at the opening bell to 630p.
READ: Dignity welcomes investigation into funeral industry
In the opening three months of 2019, 159,000 people died – 12% fewer than the same period of last year and “significantly lower” than bosses had modelled for.
As a result, first-quarter operating profit almost halved to £21.7mln (Q1 18: £37.5mln). Revenue also tumbled; down 15% to £81.1mln (Q1 18: £95.1mln).
Dignity, which, along with its peers, is being investigated by the Financial Conduct Authority, reckons historical data suggests that the final death toll in 2019 is “likely” to be within 3% of last year.
It estimates that a 3% fall in the number of deaths would wipe between £3-4mln from its annual profits.
This could be flattering though, as even that would require a “significant increase” in deaths in the second half of the year. If there is no sizeable rise, profits could take an even bigger hit.
“Whilst the number of deaths in 2019 may mean that our short-term financial performance is lower than we originally anticipated, I am confident that the changes we are making will allow us to generate sustainable growth in the medium to long-term,” said chief executive Mike McCollum.