LONDON (Alliance News) - Dignity PLC on Monday posted a rise in revenue and underlying operating profit in the nine months to the end of September and maintained its full-year expectations as it said deaths came in line with guidance.
The FTSE 250-listed funeral services company said its underlying operating profit in the 39 weeks to September 26 was GBP64 million, up 6.3% from the GBP60.2 million reported last year. Revenue in the period was up 3% to GBP196.4 million from GBP190.6 million, boosted by the number of funerals it performed and strong average incomes backed by good cost control, it said.
Since it published its half-year results in July, the company said it has bought an additional 11 funeral locations for a total of GBP12.1 million. In total in the first nine months, the company has bought 19 new locations for GBP17.3 million and has increased its satellite locations to two.
Dignity said the number of deaths in the third quarter was 129,000, up from the 122,000 a year earlier. Due to the rise during the period, deaths after the 39 weeks to the end of September were approximately 3.5% down year-on-year, having been 7% lower in the first half.
The company said its forecast for deaths in the full year remains 535,000 to 550,000, with the number of deaths in the first 39 weeks consistent with this guidance, leading the group to maintain its full-year expectations.
Dignity said trading in the fourth quarter has been in line with expectations.
"The group's operating performance in the third quarter has been strong, with the group now showing good operating profit growth year on year. Outstanding customer service and strong operational efficiency continue to underpin our activities. Our financial expectations for the full year remain positive and unchanged," said Dignity Chief Executive Mike McCollum.
In October, the company said it will return GBP64.4 million to its shareholders, hiking the previously-promised return of cash from the restructuring of its debt obligations. That restructuring cut the company's annual debt service obligations to around GBP33 million from GBP40 million previously.
Dignity shares were up 0.1% to 1,536.00 pence on Monday.
Investec reiterated its Buy rating on the stock, with a 1,660 pence price target, on its belief the company looks well placed to meet its expectations for the full year.
Dignity had a strong third quarter, the broker said, with sales rising 10% on the back of a 5% increase in deaths in the period. Its underlying earnings before income and taxation margin also proved "robust", rising 100 basis points for the first nine months and 310 basis points for the third quarter, boosted by economies of scale and increased funeral volumes.
"We believe Dignity is a quality company, able to increase revenues, despite declining deaths, and fully in control of its cost base," Investec said.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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