Shares in FTSE 250-listed funeral provider Dignity halved in value on Friday after the company warned on profits following a decision to slash its prices to retain market share.
While the company said its earnings for 2017 would remain in line with market forecasts, its outlook was clouded by the prospect of a price war as it reported "acceleration of price competition" facing its funeral business.
The company said that, effective immediately, its basic funeral service would be reduced by an average of 25%, while it would enact a price freeze on other services in the majority of its operational locations.
Dignity said it considered the move a strategic priority to retain market share and reposition itself for future growth.
Dignity said in its trading statement: "The business model for the group's funeral business is changing as the board focuses on protecting market share by introducing new service offers and price points.
"The board believes that the combination of ongoing, albeit slightly reduced, volume erosion; the freeze in the traditional funeral pricing; the reduction in the simple funeral price; the likely change in mix; the increasing proportion of funerals that have been pre-arranged and increased promotional expense, will lead to substantially lower profits in 2018."
After an hour of trade on the London Stock Exchange, shares in Dignity were down 52.81% at 908p.