InvoCare has blamed a near 60 per cent fall in full-year profit on the fact that fewer people than usual died over winter.
Australia’s largest funeral provider said revenue for the 12 months to December 31 increased 1.4 per cent thanks to successful acquisitions as well as sales of cemeteries and parts of its crematoria business.
But profit fell 57.7 per cent to $41.2 million after the number of deaths across Australia dropped 3.1 per cent from 2017 following a mild winter and effective ‘flu vaccinations.
“Operating results for 2018 were impacted by soft market conditions, namely, a lower number of deaths,” chief executive Martin Earp said on Friday.
“History suggests that these conditions are unlikely to be sustained and that reversion to the positive long-term trend is typical.”
The funeral and crematorium giant, which operates brands including White Lady Funerals and Simplicity Funerals, cut its final dividend by eight cents to 19.5 cents.
Nonetheless, InvoCare shares rose as much as 9.3 per cent after it said it had seen early results from its investment program “more than exceed our expectations”.
The majority of renovations as part of its key growth strategy are slated for completion by 2020, while the company will continue to focus on regional areas where a growing amount of retirees are moving.
The company said one third of all deaths in Australia occur in regional market areas.
New Zealand 2018 revenue was down 2.5 per cent to $45.3 million from the year prior, also following a lowered number of funerals.
Temporary closures in Singapore meant first-half funeral earnings were low, but recovered after operations resumed and rose 5.1 per cent to $16.5 million.
InvoCare acquired 11 businesses in Australia and New Zealand in 2018, adding more than 3,500 funeral cases, 1,200 cremation cases, and about $26 million in revenue per annum.
At 1350 AEDT, InvoCare shares were still $1.11, or 8.8 per cent, higher at $13.69.
FEWER DEATHS HURT INVOCARE FY PROFIT
* Net profit down 57.7pct to $41.2m
* Sales revenue up 1.4pct to $477.3m
* Fully franked final dividend down 8.0 cents to 19.5 cents