Dignity has reported a fall in third-year profits as the funeral provider has been hit by the market competition.

In the three weeks to September 29, profits for the group took a 27% hit to £11.1 million.

Market share for Dignity increased by 12.1% as the group performed an increase of 3,600 funerals so far this year to date.

The group’s chief executive Mike McCollum said: “We are pleased with how the group has performed in the period and following these results our expectations for the full year remain unchanged.”

“Our work on the transformation plan is critical and we are encouraged by the progress that has been made in the initial weeks.”

“Alongside the expansion of our digital offerings, we continue to provide a greater choice for consumers and our focus on high standards and excellent client service remains central to our plans for the future,” he added.

The funeral provided recently introduced the new no-frills cremation package, which costs £1,895.

Dignity and Co-op have been taking part in an intense price war that has been affecting profits.

In January this year, the price war led Dignity to issue a profit warning, wiping almost £500 million off the market value.

Analysts at Peel Hunt said: “The shift could be a result of marketing efforts and thus reverse in future periods or become more pronounced as having a low-cost funeral becomes more ‘fashionable’,”

“Bear in mind that most people choose funerals on personal recommendations, so the more that use a simple funeral (and like it) the more are likely to do so in future.”

Shares in Dignity (LON: DTY) are trading -6.32% at 978.00 (1127GMT).