Dignity reported a “stronger than expected” fourth quarter on Tuesday.
Operating profit for the funeral provider expects to be £79 million, which is ahead of market expectation.
In their trading update, Dignity said the stronger than expected profit was due to a comparable market share remaining robust and showing small growth year on year; the funeral average income remaining higher than anticipated; and overheads being lower than expected, partly due to the timing of some marketing spend which will now occur in 2019.
“Good progress continues to be made on the Transformation Plan. Following the price reductions introduced in 2018, the Board continues to expect average funeral incomes to be lower in 2019 than in 2018 and there are therefore no changes to the Board’s expectations for 2019,” said the group in a statement.
The funeral provider has struggled over the past year, due to increased competition from rival Co-op funeral group. The price war between providers has hit profits for Dignity. In the three weeks to September 29, profits for the group took a 27% hit to £11.1 million.
In addition, the Competition and Markets Authority said in November that they would launch an investigation into the UK funeral market, which caused shares to slide.
“The scale of these price rises does not currently appear to be justified by cost increases or quality improvements,” said the CMA at the time of the news.
Analysts at broker Peel Hunt said on the trading update that it was “a pleasing surprise”.
Shares in the group (LON: DTY) are trading +0.49% at 723,50 (1440GMT).
