(Reuters) - Britain’s Dignity Plc reported a worse-than-expected fall in underlying operating profit on Monday after performing fewer funerals in the first quarter, knocking its shares.
The company, which operates more than 800 funeral locations across Britain, said underlying operating profit fell 42% to 21.7 million pounds in the 13 weeks ended March 29.
Dignity said it performed 19,200 funerals in the first 13 weeks of 2019, down from 21,400 a year earlier. Its underlying revenue fell 15% to 81.1 million pounds.
Funeral services account for 59% of Dignity’s revenue, which it also generates by providing services such as memorials and floral tributes.
Dignity’s shares were down 6.9% to 629.5 pence at 0732 GMT.
The company said there were fewer deaths in Britain, some 159,000 versus 181,000 a year earlier.
“The company is now being more cautious on FY deaths and expecting a 3% decline, which will reduce pretax profit by 3-4 million pounds,” Peel Hunt analysts said.
The analysts cut their annual pretax profit forecast by 8% to 41.5 million pounds after a quarter in which they said there had been fewer number of deaths because of a mild winter and low flu season.
The Office for National Statistics expects long-term increases in the number of deaths in Britain to reach about 700,000 per year by 2040, Dignity said.
“The year has started below the board’s expectations primarily as a result of the number of deaths so far in 2019. Achievement of full year expectations will rely heavily on the number of deaths in the remainder of the year compared to 2018,” said the company which was founded in 1994 and listed on London’s main market in 2004.
Dignity unveiled a three-year plan to boost earnings in August and said then that it expects to invest to deliver 8 million pounds of annualised additional underlying operating profit by 2021.
An initial market study by Britain’s Competition and Markets Authority (CMA) last year found above-inflation price rises for more than a decade in the UK’s funeral sector.
“We continue to see considerable risk on pricing as the CMA enquiry continues,” Peel Hunt analysts said.
Dignity holds a 12% share of the market. It competes with Co-op Funeralcare, part of mutually owned Co-Operative Group.
Reporting by Noor Zainab Hussain and additional reporting by Tanishaa Nadkar in Bengaluru; editing by Bernard Orr and Jason Neely