A big fall is expected in the number of people dying in the UK this year, according to one of Britain’s biggest funeral providers.
Shares in Dignity, the only funeral company listed on the stock exchange, closed down 17% on Wednesday at £22.96, wiping £232m of the company’s value, after it also revealed it was facing greater competition as new firms entered the unregulated sector.
Dignity suggested the number of deaths could fall by about 5% to 560,000 this year, in line with long-term trends, following an unusually high number of deaths of about 590,000 in both 2015 and 2016.
“Historical data would suggest that deaths in 2017 could be significantly lower than 2015 and 2016,” the group, which provides funerals and operates crematoria, said.
In 2015 the number rose by 7% to 588,000 and was slightly higher still in 2016 at 590,000. Dignity described the shift as extraordinary.
However, despite the rise in deaths, the number of funerals conducted by Dignity last year fell by almost 3,000 to 70,700.
The company said it was losing market share and facing greater competition, particularly in funerals and companies offering pre-arranged funeral plans where lack of regulation was encouraging new entrants in the market. Dignity said it was also seeing businesses offering digital services in the funeral market.
Mike McCollum, the chief executive, said Dignity was actively seeking regulation of its markets: “Looking into the future, we anticipate further engagement with the Scottish and Westminster parliaments, as we believe regulation of the funeral and pre-arranged funeral markets is necessary to ensure every family receives minimum standards of care from appropriate facilities.
“We also expect to invest more in digital technologies that will help our clients and also act as a source of new business for the group.”
He added the company was introducing more affordable services that would appeal to customers “we would not normally expect to be able to help”.
An average Dignity funeral would cost about £4,000, at the higher end of the market, McCollum said. However, in late 2016 it launched a direct cremation service, Simplicity Cremations. The service costs from £1,495, where the company collects the deceased from the place of death and takes them directly to the crematorium, before returning the ashes to the bereaved. There is no funeral service.
Both David Bowie and the novelist Anita Brookner opted for direct cremations.
“It is a very stripped down service,” McCollum said. “Funerals are very traditional and people rely on traditions when they’re bereaved. This is an alternative form of funeral and it’s going to take a long time to be widely adopted but we are responding to a demand.”
Dignity said its expectations for financial performance in 2017 were unchanged but it lowered its medium-term target for earnings per share growth to 8% a year from 10%, which weighed on shares.
Sam England, analyst at the German bank Berenberg, said the company had actually performed well, with the results for 2016 beating expectations and the group signalling a strong start to 2017.
Revenue rose by 3% to £313.6m in the 53 weeks to 30 December 2016, compared with the 52 weeks to 25 December in 2015. Pre-tax profit also rose 3% to £71.2m.