Dignity (DTY) is facing the threat of increased price-driven competition and regulation, on top of a falling death rate, so it is hardly surprising that underlying profit fell by more than a fifth last year. The average income per funeral also dropped, partially a consequence of the bereaved becoming more price savvy, but the reversals fed through to a 20 per cent fall in the share price.
An industry-wide investigation by the Competition and Markets Authority (CMA) has led the company to pause parts of its transformation plan. “We don’t expect any financial savings to come through in 2020,” said chief executive Mike McCollum, as the delay impacts the group’s cost-cutting ambitions.
This is bad news given a weakening trading performance. Profits in funeral services declined by 9 per cent, as market share contracted. Dignity is still assessing the trade-off between marginal rates of profitability and market share, but for now it seems that prices will need to reduce even further.
Peel Hunt forecasts adjusted EPS of 67.5p and pre-tax profits of £43m in 2020 compared with 64.8p and £41m in 2019.
| DIGNITY (DTY) | ||||
| ORD PRICE: | 396p | MARKET VALUE: | £ 198m | |
| TOUCH: | 396-399p | 12-MONTH HIGH: | 760p | LOW: 382p |
| DIVIDEND YIELD: | nil | PE RATIO: | 6 | |
| NET ASSET VALUE: | * | NET DEBT: | £506.2m** | |
| Year to 29 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 305 | 69.0 | 115 | 21.50 |
| 2016 | 314 | 71.2 | 115 | 23.60 |
| 2017 | 324 | 71.2 | 116 | 24.38 |
| 2018 | 354 | -18.0 | -34.0 | 24.38 |
| 2019 | 339 | 44.1 | 69.8 | nil |
| % change | -4 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Negative shareholders' funds. **Includes lease obligations of £0.6m | ||||
