AA expected to reveal £194m profits as it battles falling customer numbers
The AA is expected to reveal profits of £194million this week as it tries to arrest declining customer numbers.
The roadside assistance group is set to unveil revenues of £461million for the first half of the year on Wednesday.
Profits, according to the EBITDA measure, are expected to be slightly lower than the £199million seen in the first half of 2015, according to analysts, but the company has since sold its Irish business which had boosted last year's figure.
Analysts at Morgan Stanley said a different measure, profits before tax, would be up on last year.
Fewer customers: At the end of January AA had 3.67million members, down from 3.77million the year before
It raised its revenues from roadside assistance in 2016 despite falling customer numbers, by earning more per member.
At the end of January it had 3.67 million members, down from 3.77 million the year before.
Analysts at Morgan Stanley said they expected another small fall in this week’s numbers, with the decline set to level off in 2017.
Roadside assistance makes up the bulk of The AA’s revenue and profits. It also sells acts as an insurance broker and runs the AA and BSM driving schools.
The AA is still suffering from huge debts, a legacy of its private equity ownership. It still has net debt of £2.8million and sold its Irish business for €156million earlier this year to pay some of it off.
Its car insurance broking business has declined in recent years but it is hopeful that a new system offering a more dynamic pricing system for car and home insurance deals will drive a turnaround.
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