AA takes a profits bash
By Simon Hacker | 10th October 2023
Profits for the AA have suffered a dent of nearly half in the wake of a dip in its roadside assistance activity.
The rescue and roadside repair giant said, in its pre-tax figures for the six month period ending July 31st, that profits fell, year-on-year, from £37m to £22, with cost inflation being attributed as the culprit for earnings issues in the firm's roadside work.
However, soaring motor insurance prices helped to prop up revenue growth amid a "challenging economic and competitive environment".
A spokesman said: "Continued growth in our membership and customer base, along with increasing income paid per personal member, has enabled us to deliver growth in both our EBITDA and operating cashflow."
Key aspects of the report included:
● A rise in revenue across the group by 8% to £524m in the six months to July, driven by growth in customer numbers and higher average income per member.
● Earnings in the AA's smaller insurance arm rising by 27% to £33m, as the firm increased premiums for customers in line with escalating prices across motor insurance.
● A surge in demand for cover: policies increased 4% to just over 1m for the half year.
Jakob Pfaudler, AA chief executive, said: "We have made excellent progress, with double-digit revenue growth, good cost management, and strong cash flow generation."
Equity firms TowerBrook Capital Partners and Warburg Pincus acquired the AA in 2021 and have been working to transform the company. The AA's year-on-year debt now stands at £2.28bn, slightly down on the previous figure of £2.29bn.
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