Dignity loss

Funerals firm crashes £329m into the red as death rate falls

A SHIFT to direct cremations and a fall in the death rate post the Covid pandemic has taken a heavy toll on funeral firm Dignity.

Today it said operating profits for the year to December crashed 68% to £18 million as customers opted for lower cost funeral deals.

Overall, the group slumped to a £329 million loss compared with a £32 million profit last time.

The group admits it is short of cash as revenues fall but costs rise. A £281 million takeover by an investment consortium agreed in January looks vital to its future. That deal with SPWOne, Castelnau Group and Phoenix Asset Management, is awaiting approval by the Financial Conduct Authority and its own shareholders. Dignity shares fell 3p to 531p, which leaves the business valued at £266 million, below the value of the offer. There has also been an issue with staff salaries.

Today Dignity said: “Following a benchmarking process in 2022 it was clear that employee remuneration in some areas should be increased and during the year, more than 2,500 people in key operational roles duly received increases. Since then, the Group has seen improvements in its recruitment challenge and a material improvement in vacancies filled.” Some staff have been made redundant.

On its lack of cash, the firm said: “The Group continues to have a significant need for capital expenditure to maintain its existing asset base, as well as to invest in future growth. Given current cash generation, the Group is presently unable to fund strategic additional capital expenditure from operations and is also limited in its ability to invest in marketing/advertising and promotions in order to accelerate growth.” Chief executive Kate Davidson said the firm is “alive to the factors and ongoing challenges”.

The average revenue for funerals fell from £2,394 in 2021 to £2,116 in 2022, Dignity said. The number of deaths in 2022 dropped from 664,000 to 639,000.