Dignity warns of lower earnings in short term after return to profit

UK funeral services firm Dignity swung to a full-year profit on Wednesday and warned of lower profits in the short term as it pursues a restructure.

The company reported a pre-tax profit of £32m compared with a loss of £19.6m a year earlier. Revenue fell to £353.7m from £357.5m in 2020.

Underlying operating profit fell 7% to £55.8m as a combination of rising costs and lower prices impacted margins.

Dignity implemented a new strategy after the departure of chairman Clive Whiley in a boardroom coup last April as its biggest investor Phoenix called a vote on his leadership which was backed by 55% of shareholders.

The company said a lower price regime introduced last September “is likely to lead to lower profits in the short-term”.

“Costs have been rising as we have raised the pay of our lowest paid staff. Conversely, there will be a benefit coming through from a reduction in the central costs,” it added.

“The biggest factor affecting us is likely to be the death rate and there is a real risk that after Covid-19 passes the excess death effect of the past two years starts to reverse itself which it will do at some point.”