(Reuters) - British funeral services provider Dignity Plc (DTY.L) posted a 3 percent rise in half-year revenue on Wednesday and unveiled a three-year plan to boost earnings, sending its shares up more than 10 percent.
As part of its turnaround effort, the company expects to invest about 50 million pounds over the next three years to deliver 8 million pounds of annualised additional underlying operating profit by 2021.
The company also said it was launching new products and prices that target different market segments, but added that it would have a clearer picture of preferred service offers and price points by the end of the year.
Shares of the company were up 7.2 percent at 1082 pence in morning trading
In the face of tough competition, the company has cut prices for its simpler funerals to match rival Co-operative Group’s price reductions. Despite lower prices, Dignity’s revenue rose to 174.7 million pounds, as the total number of deaths rose 5 percent in the UK during the first half of 2018.
“H1 results show the new pricing strategy is already yielding results, with stabilisation in the group’s underlying funeral market share,” Investec analysts wrote in a note.
Dignity also reaffirmed that it expects 2018 results to be in line with market expectations.
However, the company said 2019 is likely to see underlying profitability lower than 2018, but in line with current market expectations. It said it was targeting solid single digit increases in underlying operating profit in the medium term.
Underlying pre-tax profit fell 6 percent to 43.4 million pounds in the 26 weeks ended June 29.
The results come as scrutiny in the sector has risen after Britain in June threatened to introduce tougher regulation for pre-paid funerals, saying it believed some providers were not treating grieving families fairly.
Dignity said on Wednesday that it was too early to comment, as the British regulator’s preliminary findings were due only in November.
Reporting by Sangameswaran S and Arathy S Nair in Bengalurul; Editing by Bernard Orr