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Invocare expands its NZ funeral business, adding 3 funeral homes

Friday 17th August 2018

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Invocare, New Zealand's largest funeral company, has been expanding its reach across the country, with three new funeral homes purchased in the past three months, adding an extra $12 million to the firm's annual revenue.

Sydney-based Invocare has made nine acquisitions across Australia and New Zealand so far this calendar year, it said in a statement to the ASX yesterday. In New Zealand, that includes Hope & Sons Funeral Directors in Dunedin, which is the largest of the acquisitions with $5.8 million of annual revenue from 650 funerals and 470 cremations, Whitestone Funerals in Oamaru with $1 million annual revenue from 130 funerals and 90 cremations, and William Morrison Funerals in Auckland with $5.2 million annual revenue from 950 funerals and 720 cremations. The South Island deals took place in June while the Auckland deal is due to be completed at the end of this month.

Funeral companies in New Zealand have traditionally been privately owned family businesses, making up what analysts call a “fragmented market”. That’s changing as smaller operators amalgamate and publicly listed companies like Invocare and Propel Funeral Partners acquire smaller operators to form bigger, more efficient groups.

Invocare listed on the ASX in 2003 and expanded to New Zealand in 2011 with its purchase of the largest operator, Bledisloe Group. Invocare's latest acquisitions add to its existing 19 funeral-home brands in New Zealand.

The company yesterday reported its New Zealand earnings before interest, tax, depreciation and amortisation dropped 9.3 percent to $4.4 million in the first half of its financial year to June 30, compared with the year-earlier period. Sales fell 0.7 percent to $23.8 million while expenses lifted 9.3 percent to $19.6 million as its personnel costs rose due to market wage increases of 2.5 percent and the impact of organisation redesign. Its operating margin weakened to 18.5 percent from 20.3 percent.

Invocare said its first-half case volumes in New Zealand were flat, down 0.7 percent to 2,766, and its market share was stable "in a competitive market".

"Pricing remains highly competitive in all markets," the company said in its New Zealand results summary. 

Invocare is 20 percent of its way through a group wide "Protect & Grow" renovation plan to modernise its funeral homes and it said yesterday that this development activity, together with its strategic acquisitions, positions New Zealand for growth in the second half of this year and into the 2019 financial year.

At a group level, its first-half operating ebitda slipped 0.3 percent to A$53.7 million, which it said reflected disruption from its renovation programme as well as soft market conditions. It estimates it lost 650 cases due to locations being temporarily closed for renovation but expects its market share to increase in 2019 as more of its locations are renovated, new locations come on-line and the impact of recent acquisitions are taken into account.

Invocare is the biggest provider of funeral services in Australia, New Zealand and Singapore and the largest operator of private cemeteries and crematoria in Australia.


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