InvoCare Limited (ASX: IVC) Revenue Plunged As Deaths In Australia Collapsed

  • Oct 08, 2018 AEDT
  • Team Kalkine
InvoCare Limited (ASX: IVC) Revenue Plunged As Deaths In Australia Collapsed

Amid Hayne Royal Commission’s scathing attack into the funeral market, InvoCare cautioned the slump in the funeral case volume arising due to mild winter and effective flu vaccine campaigns.

Early this morning, 8 October 2018, funeral pre-paid contract services provider InvoCare Limited unveiled the impact of decline in number of deaths in Australia which has witnessed $17 million plunge in company’s revenue driven by 5.8% decline in volume for nine months ended September 2018, compared to the prior calendar year.

It does not come as a shock to investors because in the August’s announcement to first half year results the company has already instigated the softening of case volumes; however, the situation has got worst since then. The mild cool breezes across Australia and New Zealand along with effective flu vaccine campaigns confirmed the death rate lower than the industry wide trend. The impact is such that with every 1% decline in number of deaths, IVC funeral revenue fells by approximately $3 million on annualized basis.

The state authorities have given it’s stamp to the contracting statistics of deaths in Australia. It told that Australian market has eyed 5.9% decline in number of deaths in June to August period over the previous corresponding period while estimates for September have drifted even lower.

InvoCare Limited pitched the warning in the market that if the situation continues to move in the same fashion, it wouldn’t be a bombshell to see an overall negative impact on full year results for the period ended 31 December 2018.

Martin Earp, Chief Executive Officer of InvoCare stated “this variation is unusual.” He informed that despite improving market share which are roughly 33% of the Australian funeral market, there will be a negative impact on full year results of the company.

The cracks are also to be seen in Cemeteries and Crematoria division which records an estimated $0.7 million decline in revenue with every 1% collapse in volume. As stated in previous half year results release, the company reconfirmed its uncertainty to meet the prior case average price rise. However, the Protect & Grow strategy of the company is said to be on track with the aim to deliver the targeted increase in 2018 renovated location.

Meanwhile, the expansion of operating activities has been continued to be undertaken through two new acquisitions by IVC since the release of its first half results in August. This has brought the total number of acquisitions completed so far in 2018 to eight in Australia and three in New Zealand, thereby contributing approximately $25 million in group’s annual revenue.

The downswing in the trade performance has dragged down InvoCare shares as much that it tumbled 4.351% to trade at $11.430 on 8 October 2018 (1:44 PM AEST). The stock has seen a performance change of -24.41% over the past one year.

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