Dignity (LSE:DTY) returned to profit last year but said a new strategy would “lead to lower profits in the short-term.”
The UK funeral services group added “the biggest factor affecting” profitability will be the reversal in the excess death effect of the past two years as the Coronavirus (COVID-19) pandemic eases.
In addition, the business is likely to use more cash than it generates as it invests in facilities to make up for past under investment and to roll out its new strategy and local branding programmes.
“We need to look through to the long-term value being created by turning Dignity (LSE:DTY) from a business perpetually losing share in structural decline into a successful and growing business,” the company said in a statement.
For the 53 weeks to December 31 last year, pre-tax profit was £32.0mln compared to a loss of £19.6mln. Revenues dropped 1% to £353.7mln.
The company also said it does not expect to resume dividend payments until it has returned to a more “sustainable financial footing”.
It last paid a dividend in June 2019.
Dignity added in March this year it agreed a 12-month waiver to its main financial covenant with noteholders to protect from a post-pandemic drop in the death rate.
Dignity shares were down 10.49% to 476.19p.