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IT’S been said that there are two certainties in life - death and taxes. But does that hold true in a pandemic? Not according to one of the UK’s largest funeral providers.

Dignity (DTY) says it expects its full-year profits to be lower because the pandemic threw the ‘normal’ UK death rate off track. It expects underlying operating profits for 2021 to come in at £54.7 million, 9.3% below the £60.3 million it made in 2020. And it has also warned that the “distorting” impact of the pandemic on the timing of deaths, means there is “significant uncertainty” around the UK death rate in the shorter term.

Despite the tremendous death toll of the pandemic, last year Dignity slipped into the red with full-year losses before tax of £19.6 million. That compared with a profit of £44.1 million in 2019 and despite a 14% rise year-on-year in the number of UK deaths.

Death may be a certainty, but it seems the funeral industry’s ability to make money, isn’t. And as a result, the group, which shares a 30% share of the UK funeral market in the UK with its rival the Co-operative Group, has seen its share price fall 75% in the past five years.

Describing the pandemic as “a period of significant disruption for the wider funeral market,” it said that government restrictions had “put limits on the group's business activities”. It also seemed to suggest that gauging profits going forwards would be more difficult because the increase in the number of funerals and cremations in 2021 was outside the usual five-year average of 590,000 deaths a year.

Gary Channon, chief Executive of Dignity, said despite continuing market disruption from the pandemic, ongoing strategic changes would position the business to grow and best serve families for their end-of-life needs. More has been promised on the progress of those changes when the group posts its full-year results on Wednesday 23 March.

The company has though already taken steps to ease its debt liabilities; asking lenders to give it some scope around their existing rules on loans “on a precautionary basis”, while it works its way through shifting patterns brought about by the pandemic.

This seemingly solemn industry hasn’t been without its own share of drama in recent years either. In December 2020, the Competition and Markets Authority found that funeral director fees quoted by Dignity were on average £1,400 more expensive than those quoted by smaller, typically family-owned firms; largely because the recently bereaved tended to be “insensitive to price”. Months later a shareholder revolt ensued.

Dignity’s full-year results are due out on Wednesday 23 March.

More on Dignity

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