Look out ‘baby boomers’, Propel Funeral is banking on you to boost its profits in 2019
Health & Biotech
Health & Biotech
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Climate change could be hitting the funeral business, as Propel Funeral says unusually warm weather in autumn and winter kept more people alive.
That and a “benign 2018 flu season”, says managing director Albin Kurti.
But not to worry: he thinks the severity of the 2017 flu season may have ‘pulled forward’ more deaths that should have happened this year, and everyone has to die eventually.
Mr Kurti was delivering his address to shareholders at the AGM and explained that while seasonal issues hurt the bottom line in the second half of fiscal 2018 — in other words, fewer people died — the only way is up for funeral operators in Australia.
Happily for “death care services”, a quiet year with higher survival rates is often followed by one that is marked by fatalities.
Even with fewer people carking it, Propel (ASX:PFP) still saw full year revenue jump 76 per cent and operating profit jump 164 per cent. Costs associated with a restructure and IPO in November meant the company made an actual loss of $14.3m.
Not to point the bone, but the company is quietly confident that baby boomers will support its business for years to come.
“Demand for death care services is expected to grow in Australia and New Zealand because of increasing death volumes due to population growth and ageing of the ‘baby boomers’,” chairman Brian Scullin told investors.
Propel’s data shows that in 2017 a record number of people died in Australia — 161,000 — compared to only 41,000 in 1990.
Furthermore, the Australian Bureau of Statistics believes deaths are going to top 200,000 a year by 2030 for the first time.
As such, it’s a good time to be in the funeral business, climate change and mild flu seasons notwithstanding.
“A growing and ageing population means that roughly the same increase in death volumes is expected to occur over the next 13 years as occurred during the last 27 years,” Mr Kurti said.
Propel shares opened flat at $2.64.