COMPANIES Dignity, the UK’s only listed undertaker, hopes to find growth in spite of a falling death rate by raising prices and making further acquisitions of local family-run funeral businesses.
The winter flu virus helped the company – which once organised the burials of east London gangsters Ronnie and Reggie Kray in ceremonies that attracted thousands – boost pre-tax profit in 2007 from £27.2m ($55.2m) to £30.2m.
Revenue rose from £149.8m to £159.5m even though Dignity carried out the same number of funerals – 66,500 – as the previous year. The average spend rose from £1,804 to £1,899.
Peter Hindley, chief executive, predicted funerals were likely to become less lavish in an economic slowdown but said that would not affect Dignity’s business of supplying customers with the basics, such as collecting bodies.
The death rate has fallen in recent years. However, Mr Hindley said the company would stand to benefit when it picks up again by 2012, when baby boomers will be of an age when they could join Dignity’s clientele.
Crematoriums contributed 16 per cent of revenues and Mr Hindley said the company was in talks with two local authorities, Torbay Council and Weymouth & Portland, as councils consider outsourcing.
The company, which runs 540 funeral parlours trading under local names, invested £20.9m in new hearses and limousines and spent £16.5m on acquisitions in 2007, more than usual.
Earnings per share were 34.4p (25.9p) and a final dividend of 6.67p gives a total pay-out for the year of 10p (9.09p).
The shares, up 14.6 per cent in the past 12 months, on Thursday closed down 13p at 735p.
FT Comment
● Is this the ultimate defensive stock? In spite of the falling death rate, prices have risen above inflation and the longer term demographic is in its favour. Acquisitions are on the cards and the pre-paid business will provide resilience. Dignity, which performs 12 per cent of UK funerals, may be bracketed within the support services sector but comparisons with peers are meaningless. A price-earnings ratio of 21 implies growth is a dead certainty.
