Dignity rises as profits beat expectations despite tough year

Dignity’s problems are not terminal it seems as the company beat market expectations to rake in a £79m profit.

The group rose 2.1 per cent as the markets opened this morning, bringing it to 735p, but well below its 1,880p price on this day last year.

Read more: Dignity shares slide after regulator proposes funeral competition probe

The funeral provider said that initial indications that around 599,000 people died last year were in line with expectations.

However, the company managed to claw back some market share after cutting prices in the face of increased competition.

Meanwhile its average income from each funeral remained higher than anticipated, the company said as it prepares for its full-year report on 13 March.

“We believe the strong finish to the year will provide reassurance that the new pricing strategy remains effective. We are encouraged by the improvement in market share, despite further price cuts by the Co-Op towards the end of FY18,” Cora McCallum and Andrew Whitney from Investec said in a note to investors.

The funeral provider was hit by a series of blows last year, ending 2018 with its shares almost 62 per cent down on the beginning of the year.

As the UK’s only listed funeral provider, it was Dignity which took a beating in November after the Competition and Markets Authority said it would probe the sector “after identifying serious concerns”. The company lost 15 per cent of its value on the stock exchange.

However, the group has also taken steps to mitigate the problems likely to be raised in a government investigation, introducing more affordable plans for struggling customers.

Half its stock value was wiped out in January 2018 as Dignity said it was slashing prices to protect its market share.

Read more: Funeral provider Dignity sees share price slide as profits drop amid rising competition

Concerns around increased prices in the funeral industry which are not justified by increased levels of service, have led critics to call for more stringent government oversight.

Dignity had become a darling of the stock markets, with share prices reaching giddy heights of nearly 2,900p per share in late 2016, four times its price in the beginning of 2011.