People spent less on funerals during Covid: Invocare

Australia’s largest funeral provider says families chose simpler funerals and direct cremations for their loved ones during 2020.

Announcing its FY20 results to investors, Invocare reported the average cost of a funeral was down four per cent on the year before. That is, the average cost of a funeral was $7882.

“Funeral case volumes were 2.5% down for the year, with volumes in the second half down just 1.6% as restrictions eased. Funeral case average suffered the greatest impact from COVID, down 4.0% on the PCP (prior corresponding period).

Simpler arrangements and an increase in direct cremations during the height of lockdowns drove a decline in professional service fees and demand for catered funeral services.

In most markets the business was able to meet this change in demand through its Simplicity and Value Cremations branded locations. As restrictions eased, signs of a return in demand for the ‘gathering’ element of a funeral service to celebrate the life of a loved one have been observed.”

Invocare ASX Announcement, 24 Feb 2021

What are direct cremations?

Direct cremations are exactly what the name suggests. No funeral, no frills, just a cremation. The body is transported from the home or hospital to the funeral company’s mortuary where they are kept until a cremation can be organised. They are then transported directly to the crematorium. Direct cremations have been increasing in popularity over the past five or so years.

My mother was directly cremated a year ago this week. She had told me she didn’t want a funeral and we had discussed a direct cremation. There was no costly coffin, no hearse required (coffins are moved in a van), no funeral venue hire, no catering, no printed order of proceedings or hymn booklet etc. My family used an independent funeral director to collect mum from the hospice and within two days she had been cremated. I had made inquiries about witnessing the cremation. The crematorium was Invocare-owned and I was told that would cost an additional $600.

The nitty gritty $$$

Let’s talk dollar$ briefly.

Today InvoCare Limited reported a statutory net loss after tax attributed to shareholders of $9.2 million for the year ended 31 December 2020. The COVID pandemic and the associated government restrictions had a significant impact on both InvoCare’s ability to deliver full-service funeral arrangements and on the mortality rate in the countries in which its businesses operate. As disclosed to the market on 17 February 2021, this 2020 full year result includes the impact of net $26.5 million (pre-tax) of significant operating and non-operating item, mostly linked to the impact of COVID on the Funeral Services sector and the broader economy in Australia and New Zealand.
• Statutory Revenue down 4.5% to $477.7 million
• Operating Revenue down 4.7% to $476.2 million
• Operating EBITDA down 29% to $102.6 million
• Reported Loss After Tax attributable to shareholders of InvoCare Limited of $9.2 million

FY20 Results Investor Presentation

Families happy with their Invocare service

There’s no denying 2020 was a challenging year for all of us. It was particularly difficult for those who lost loved ones because funeral restrictions prevented gatherings and collective grieving. But funeral directors, whether they be independent or owned by big business, did every thing possible to help families as best they could. The live streaming of funerals is nothing new to the funeral industry – it’s been done for years – but Covid restrictions really upped the ante on this type of funeral technology and its use. And funeral directors had the responsibility of keeping people safe by implementing strict Covid plans. It must have been really difficult at times when people were feeling overwhelming grief and hugs could be few and far between.

The hard work, agility and dedication of InvoCare’s frontline workforce was clearly recognised by client families, with the Australian Funeral Services business maintaining a strong Net Promoter Score (NPS) of +79, an excellent result in a challenging year.
The business experienced difficult trading conditions in the middle of the year but the breadth of its brand portfolio and the geographical diversification of its network have assisted in limiting the decline in operating revenue to 7.3%, delivering $292.3 million in revenue for the year. The intentional focus on maintaining service capability, plus a $2.0 million increase in its provision for aged debtors contributed to a 27% decline in Operating EBITDA to $62.5 million.

Invocare ASX Announcement, 24 Feb 2021

So what’s a NPS, a net promoter score? It’s a feedback mechanism. Clients are surveyed and asked if they’re likely to recommend the business. The NPS rates their likelihood to recommend a company, a product, or a service to a friend or colleague. Invocare says its NPS is +79 which is very, very good. 

Pet cremations not affected by Covid

For the past few years InvoCare has been diversifying into pet cremations. Late last year it bought two large pet cremation businesses for just under $50 million. The acquisition gave InvoCare a national footprint when it comes to pet cremations. And it’s going to be a big earner. I’ve got the urns containing three dogs’ remains at my place.

The average cost of a pet cremation with InvoCare in 2020 was $316. Almost 15,000 pets were cremated. And InvoCare expects strong growth in the pet cremation sector. But there’s a new player in the pet ‘cremation’ market. We’re going to see an increase in the offerings of (non-InvoCare) water cremation of pets. But that’s a whole other blog which I’ll get to in coming weeks.

Funeral are big business so be prepared

So there you have it. Funerals are BIG business and they’re worth LOTS of money. InvoCare is the biggest funeral player here in Australia, by far. It owns 278 funeral director businesses, 25 crematoria and 17 cemeteries/memorial parks. Like all funeral businesses, they’ve been working in challenging conditions with Covid restrictions affecting funerals, mourners and the way they grieve. I say a big congratulations to all funeral workers for working so hard for families in difficult times. You play a very important part in the lives, and deaths, of people.

InvoCare’s average funeral cost last year was nearly $8,000. That doesn’t include the price of a cemetery burial plot. To reduce that cost, don’t be afraid to shop around and ask questions. You don’t have to let the funeral company print your order of proceedings or hymn book. Make your own. Organise your own flowers, provide your own catering. Tell your family you don’t want an expensive coffin so, when the time eventually comes, they won’t feel like they have to spend $3,000 on a coffin.

Perhaps invite your local funeral director to your local Lions or Rotary meeting where you ask them about the ins and outs of funerals. Or just call one for a chat. While researching my book, The Bottom Drawer Book: the after death action plan, I found funeral directors to be very approachable. Being informed will help you make better and easier decisions at a time of great grief.

ABOUT THE BLOGGER: Lisa Herbert is a death literacy advocate, a cemetery wanderer, journalist and author of The Bottom Drawer Book: an after death action plan, an informative and amusing workbook and funeral planning guide for those who want to prepare for the inevitable. It is available in Australia for $24.95, including postage (Additional postage of AU$9 is payable for overseas orders). 

Lisa Herbert, blogger and author.

More Aussie deaths this winter to boost Invocare’s profits

Australia’s largest funeral provider has today told shareholders that things are looking up in 2019. Yes, death numbers are on the rise!

Yay, the flu!

Yay, a cold winter!

In a performance update to the Australian stock exchange, Invocare, says “the soft market conditions had started to improve, with the number of deaths beginning to revert to the long-term trend”.

What’s the long-term trend? This chart taken from today’s presentation to shareholders shows it clearly. Look at the solid orange line. They were last year’s deaths. The doted line is the five year average which is what Invocare shareholders will be pleased to know is returning.

More deaths = more revenue. Yay!

Invocare (IVC) owns many, many, many funeral businesses, cemeteries and crematoria across Australia, Singapore and New Zealand. The best known funeral brands are owned by this huge company – Simplicity Funerals, White Lady, Guardian. Here’s a list but this is growing all the time. Here are the company’s most recent acquisitions. You’ll note many of these were small town, family businesses:

What does this tell us?

Invocare’s statement to the ASX and its presentation to its shareholders tells us there’s money in funerals. BIG MONEY. While Invocare’s profits were down last year because of fewer deaths (damn that warm winter!) and some business acquisitions and renovations, the company made more than $41 MILLION profit. These are the highlights provided to shareholders today:

Be prepared. Do your homework now.

Funeral directors have a very important job. They provide a great service to us when we’re at our most vulnerable, when we’re confused and when we’re grieving. No-one can deny the significance of their role.

But funerals are big business too. Do your homework, be prepared, shop around. Perhaps even visit your local funeral director and ask questions before you need their services. Get to know them. Get to know what services they provide and for what cost. Understand what services you need and don’t need. Demand transparency. For example, do you really need the funeral director to print the order of proceedings for $250? I’m pretty sure one of your family can whip it up on their laptop and print 50 copies at home for $30.

With a little knowledge and understanding, when the time does finally come, you and your loved ones will be prepared and the process of organising a funeral (and paying for it!) won’t be so confronting.

Tell your family what you want

Give permission for your family to buy a cheap coffin and spend the money they save on a holiday or lots of booze for the wake. Let them know you don’t want a big fuss. Or tell them that you do! It’s your funeral. Have it your way. The key is simply communication.

Books like The Bottom Drawer Book: an after death action plan can help with this conversation. It’s a colourful and informative workbook that lets you write down what kind of a funeral you want, if you want to be cremated or buried, what music you’d like played, whether you want the church involved, and even what you’d like to wear at your own funeral. (Personally, I will come back and haunt anyone who buries me wearing heels!)

The book is an Australian publication and sells online for $18.95 delivered. More information are thebottomdrawerbook.com.au.

The Bottom Drawer Book author Lisa Herbert.

ABOUT THE BLOGGER: Lisa Herbert is a cemetery wanderer, journalist and author of The Bottom Drawer Book: an after death action plan, an informative and amusing workbook and funeral planning guide for those who want to prepare for the inevitable. It is available in Australia for $24.95, including postage (Additional postage of AU$8 is payable for overseas orders). She enjoys telling the stories of the dead because they reveal so much of our history and way of life.