Number of deaths this year likely to be down 3%, says one of UK’s biggest undertakers

A significant fall in the number of people dying in the UK during a mild winter has forced one of Britain’s biggest undertakers to issue a profit warning.

Dignity, the UK’s only funeral services company that is listed on the stock market, said the number of deaths in the 13 weeks to 29 March had fallen by 12% to 159,000. This led to a 15% drop in revenues to £81.1m and dragged underlying operating profit down by 42% to £21.7m.

The company said historical data over the past 20 years indicated that deaths in the full year were likely to be 3% lower than in 2018, at 580,000. This meant its full-year operating profits would come in £3m to £4m lower than expected. It had forecast £307m of revenues and profits of £68m.

The news sent the company’s shares down 6% in early trading.

Analysts said the fall in the death rate was caused by a mild winter, which meant fewer cases of flu and therefore fewer fatalities among elderly people. But they said the long-term trend of increasing deaths as the population ages was unchanged.

According to provisional figures from the Office for National Statistics (ONS), 142,652 people died in England and Wales in the first three months of 2019, compared with 164,574 in the same period the previous year.

An estimated 599,000 people died in Britain in 2018, a small increase on 2017. The ONS expects the number of deaths to go up in the long term, and reach 700,000 a year by 2040.

Dignity carried out 19,200 funerals in the quarter, down from 21,400 a year earlier. But its market share rose to 12.0% from 11.7% after it improved its services and cut its prices last year, in response to a price war started by the Co-op.

It slashed the price of its cheapest funeral by 25% and has been trialling unbundled services for bespoke funerals since August. Since last year, its prices have been frozen at £1,995 for a simple funeral in England and Wales, and £1,695 in Scotland, plus third-party fees.

Dignity made £190 less from each funeral on average than in 2018, and expects average income for the year to be about £2,940 a ceremony.

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Dignity also carried out 18,000 cremations, down from 19,100, with a market share of 11.3%. It pointed to the growing popularity of direct cremations – a no-frills option with no ceremony and no mourners present, where the body is collected, cremated and the ashes are returned afterwards.

The company said there was rising demand for direct cremations, priced at £995, from “people who want affordability”, but a number of celebrities – David Bowie, Prince and the novelist Anita Brookner – have also opted for this kind of send-off. Many families struggle to afford funerals, which typically cost between £3,000 and £5,000.

The Competition and Markets Authority has found that the cost of organising a funeral has risen by 6% a year – twice the inflation rate – for the past 14 years, and launched an 18-month investigation into the funeral market in March. It noted that profit margins at the biggest companies were high by international standards, with Dignity’s in particular “well above” those in other countries.