Dignity plunges to £275m loss as Britons cut back on funeral spend and group is forced to slash prices
- Dignity made a £275.3m loss in 2022 after taking c.£200m in impairment costs
- The firm’s revenue was hit by price cuts it made on funeral services in late 2021
- Many Britons have become reluctant to spend large sums on a funeral service
Funeral provider Dignity has plunged to a heavy loss as hard-pressed customer opt for cheaper services and rising competition slows market share growth.
The Birmingham-based firm plunged to a £275.3million loss in 2022, having posted a £12.1million profit the previous year after taking total impairment charges of almost £200million.
It said its funeral services business was substantially impacted by the higher-than-expected increase in people choosing to have direct cremations instead of full burial ceremonies.
Alternatives: Dignity said it was substantially impacted by the higher-than-expected increase in people choosing to have direct cremations instead of full burial ceremonies
Due to cost-of-living pressure and a wish for relatives to inherit money, many Britons have become reluctant to spend large sums on a funeral service and are instead opting for no-frills alternatives.
This has inevitably cut into the group’s revenues, which declined by 9 per cent to £323.1million last year, after a drop in death rates after the pandemic-induced bump wound down and the introduction of a new pricing strategy.
Dignity cut the price of funerals significantly for customers in the latter half of 2021 in response to a long-running funerals market investigation by the Competition & Markets Authority, as well as tougher competition from rivals.
As a result, the average revenue from each funeral service organised by the group, excluding over 600 delivered under its Safe Hands plan, declined by around 12 per cent to £2,116.
Though the firm boosted its share of both the UK cremation and funeral services sector, it claimed staff shortages had resulted in weaker-than-forecast growth.
It expects the factors that affected its performance in 2022 to remain this year, including the capital investment for funding future expansion.
But chief executive Kate Davidson said the company was optimistic that its strategy ‘will deliver sustainable growth and the highest standards of care and service to our customers’.
She added: ‘We have a continuous emphasis on growing our market share across each of our businesses and a commitment to ongoing investment in our people, facilities and infrastructure to unlock Dignity’s long-term success.’
The firm is set to be taken private after a consortium spearheaded by one of its former bosses, Gary Channon, and insurance tycoon Sir Peter Wood – the founder of Direct Line, Sheila’s Wheels and Go Compare – agreed to buy the company.
Dignity received four takeover offers last year ranging from 475 to 525 pence per share but settled for a 550p offer valuing it at approximately £281million.
Approval for the deal remains contingent on a shareholder vote and the Financial Conduct Authority, which became responsible for the funeral industry regulation in the UK last June.
Dignity shares were 0.75 per cent lower at £5.30 on Friday lunchtime, although their value has increased by around a quarter since the start of the year.
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