Defensive, cash-generative funeral services star Dignity's (DTY) shares are off 3.8% at £26.31 following a strong post-Brexit run, some investors taking profits off the table on a half-time profits drop.
Yet Dignity, one of few stocks that are genuinely Brexit-immune, continues to deliver steady earnings and dividend growth whilst successfully consolidating a fragmented industry.
Click here to view results for the half to 24 June from the funeral services provider, whose shares have performed particularly well since the referendum, skittish investors seeking shelter in its strong defensive properties and consistent earnings.
Newcomers to the story might view an 8.8% drop in underlying profit before tax to £42.4 million on sales of £158 million (2015: £158.7 million) as mildly disappointing. Yet this would be to ignore the message communicated consistently by management, led by CEO Mike McCollum (pictured below).
The profits reverse reflects a 4.7% drop in the estimated number of UK deaths to 302,000 seen in the half, as per previous guidance. McCollum 'continues to expect that the high number of deaths seen in 2015 will normalise in 2016.'
Pleasingly McCollum, informing Shares he expects zero impact on the business from Brexit, says the crematoria operator-to-pre-arranged funeral plans provider 'traded slightly ahead of our expectations' in the half, second quarter operating profits coming in £600,000 higher than in 2015.
He also points out the half's underlying operating profit was still 22% north of the £45.6 million generated in 2014. Reassuringly, while operating profits will be slightly down this year, Dignity has raised the dividend 10% to 7.85p and 'remains committed to its target of increasing earnings per share by an average of 10 per cent per year over the medium-term.'
Dignity continues to execute on a buoyant acquisitions pipeline too, having spent £5.4 million on six established funeral locations during the half. Since period-end, it has completed the acquisition of three freehold crematoria from Funeral Services, trading as Co-op Funeralcare, under an agreement to acquire five crematoria from them for £43 million.