Companies benefiting from your heartbreak

As more marriages crumble, some industries soar.

a woman

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According to data provided by IBISWorld, the number of divorces in Australia has grown significantly over the past five years, climbing 8.7% from 47,209 to 51,311. This increase could be attributed to a large number of circumstances, including growing work pressures and individualism, and declining religious participation.

Furthermore, the costs of divorce have also climbed. Contested divorces – which attract the highest costs – amounted to a total of $155.5 million, up 14.7% since 2008. Meanwhile, uncontested divorces are costing a total of $184.1 million – an increase of 13.5%.

It may come as no surprise that a number of industries are directly benefiting from this recent trend, with many companies realizing significant gains over the past 12 months.

The legal industry has been a huge beneficiary of the growing number of divorces in Australia. As divorces become more complex – for instance, dividing the assets or arguing for custodianship of the children – more people are seeking the services of companies such as Slater & Gordon Limited (ASX: SGH).

Whilst it would be unreasonable to suggest that its 55% gain in the last 12 months has come solely as a result of growing divorce rates, the increased number and costs of divorce cases has certainly contributed. For the half-year ended 31 December, the company recognised a 61.3% increase in net profit after tax (NPAT) compared to the previous corresponding period, whilst revenue also increased by 46.5%.

Online dating services such as RSVP.com – owned by Fairfax Media (ASX: FXJ), has also reaped the benefits from the trend. As more and more couples opt for divorce, the convenience of going to a webpage and reviewing possible love matches seems to be attracting more and more Australians. RSVP.com boasts 1,200 new singles to the site every day – many of whom are divorcees searching for new love.

According to The Sydney Morning Herald, childcare services are also benefiting from the growing rate of heartbreak. It has been found that services provided by companies such as G8 Education Limited (ASX: GEM) will be utilised by recently separated couples as they try to get their affairs together. Currently, G8 is the only ASX-listed childcare service, managing 166 centres across Australia. Recently, the company announced that revenue for the 2012 year had gained 26% since 2011, whilst NPAT had also gained 11%. Since November 2011, the company’s shares have gained an astonishing 449%.

Foolish takeaway

In today’s day and age, money can be made off just about anything. As unpleasant as it may seem, the rates and costs of divorce are on the increase, and so are these industries.

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