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AA To Meet Full Year Earnings Guidance Despite Extreme Weather

9th Aug 2018 10:04

LONDON (Alliance News) - AA PLC said Thursday it is on track to meet its full year guidance despite the "extreme weather conditions".

The insurance and car breakdown service provider is on track to meet its previously announced trading earnings before interest, taxes depreciation and amortisation target of between GBP335 million and GBP345 million.

In the six months ended July, the company's paid membership base declined 1%, in line with expectations, to 3.3 million due to a decrease in retention rate to 81%.

AA said its retention rate dropped due to increased regulatory pressures, including renewal price transparency, and increased competitor activity.

Total breakdowns in the period increased 8% to 1.9 million - significantly higher than expectations and the company's 10 year average.

The increased costs of third-party garaging to supplement patrol availability was partially offset by the additional revenue generated from AA's pay-for-use business to business contracts.

AA's Insurance business increased its motor policies by 7% to about 659,000, in line with expectations. The company's home policy book has been broadly flat, well ahead of management expectations.

AA extended its effective near term maturities until January 2022 - meaning the average maturity of its debt is now just below five years.

The company releases its interim results on September 26.

Shares in AA were up 0.4% Thursday at 114.35 pence each.


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