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Invocare NZ annual earnings lift 12% on higher death rate, fatter margins

Monday 19th February 2018

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Invocare, the largest private funeral, cemetery and cremation operator in the Asia Pacific region, boosted its New Zealand earnings by 12 percent last year, assisted by a rising death rate and fatter profit margins.

New Zealand operating earnings before interest, tax, depreciation and amortisation increased to A$10.1 million in the 2017 calendar year, from A$9 million in 2016, the Sydney-based company said in a statement to the Australian Securities Exchange. Sales advanced 4.8 percent to A$46.4 million while the margin on sales grew to 21.7 percent from 20.3 percent. In New Zealand dollar terms, sales were up 5.9 percent to $50 million.

Invocare operates 270 funeral homes and 16 cemeteries and crematoria across Australia, New Zealand and Singapore, having sold its US operations last year. The company is benefiting from a rising death rate due to population growth and ageing of the ‘baby boomers’. There were 33,339 deaths in New Zealand last year, up from 31,179 in 2016, and Statistics New Zealand predicts annual death numbers will increase to more than 40,000 by the late 2030s and exceed 50,000 by the 2050s.

In its report today, Invocare said New Zealand "case volumes were up 4 percent, largely due to an increase in number of deaths." 

Invocare expanded to New Zealand in June 2011 with its purchase of New Zealand’s largest operator, Bledisloe Group. It's investing $35 million into its New Zealand business over three years to update its facilities under its ‘protect and grow’ strategy focusing on organic growth. Its research has found that funerals are becoming more of a public celebration, and people are increasingly focused on the ‘after-funeral’, prompting it to trial liquor licenses and modernise facilities to make them less like a doctor’s surgery.

In the latest year, group net profit jumped 37 percent to A$97.4 million on a 1.4 percent increase in sales revenue to A$456.9 million.

In its outlook comments today, Invocare said the updating of its facilities this year will impact the business, temporarily reducing market share before a period of stabilisation as building work is completed. It has a market share of about 19 percent in New Zealand.

"The 'protect and grow' investment is expected to drive market share growth beyond 2018, together with further acquisitions in Australia and New Zealand," it said.

The company lifted its final dividend to 27.5 Australian cents, from 25.5 Australian cents a year earlier, taking the total annual dividend to 46 Australian cents from 42.5 Australian cents.

Its shares fell 8.2 percent to A$14.20.

(BusinessDesk)

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