AA Annual Adjusted Earnings Fall 3% On Increased Breakdown Call-outs

LONDON (Alliance News) -AA PLC on Tuesday reported a rise in annual pretax profit, but a drop ...

Alliance News 17 April, 2018 | 10:46AM
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LONDON (Alliance News) -AA PLC on Tuesday reported a rise in annual pretax profit, but a drop on adjusted basis due to increased costs of using third-party garages and higher than expected breakdowns.

The car recovery company also said it cut its dividend payout for the 2018 financial year by 46% as a result of the new planned investments and a dividend covenant under the company's debt structure. It has declared a total dividend of 5 pence per share for 2018 financial year, versus 9.3 pence a year ago, comprising an interim payout of 3.6p and a final payment of 1.4p.

AA recorded pretax profit of GBP141 million for the year ended January 31, up from GBP100 million in the year ago period, on a revenue of GBP960 million and GBP933 million, respectively. The increased profit was due to the one-off pension past service credit and decrease in finance costs.

Trading earnings before interest, taxes, depreciation and amortisation - the company's preferred profit measure - fell 3% to GBP391 million from GBP403 million, in line with its previously announced guidance.

The drop in trading Ebitda was attributed to the reduction in Roadside recovery trading Ebitda, reflecting higher costs from third-party garaging due to workload peaks and the higher number of breakdowns.

Trading Ebitda for the company's core roadside recovery division fell to GBP345 million from GBP365 million. Insurance trading Ebitda rose to GBP79 million from GBP76 million.

"The AA has delivered a solid performance, in line with guidance, despite the difficult weather conditions. We have made a positive start to the 2019 financial year as we begin to execute on our new strategy to put service, innovation and data at the heart of the AA with additional investments to grow Roadside and to accelerate the growth of Insurance," Chief Executive Simon Breakwell said.

"We remain confident our financial requirements are well funded and will continue to seek ways of lowering the cost of borrowings and de-lever over time," Breakwell added.

For 2019 financial year, the company expects to record trading Ebitda of between GBP335 million and GBP345 million.

It plans to declare 2p per share total dividend for 2019 financial year, split 0.6p per share for the interim and 1.4p per share for the final.

In August 2017, AA removed Bob Mackenzie as executive chairman and employee of the group for gross misconduct. Senior Independent Director John Leach became Chairman.

Shares in the company were trading 7.7% higher at 122.45 pence in morning trade.

By Tapan Panchal; tapanpanchal@alliancenews.com

Copyright 2018 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar
Rating
AA PLC 125.30 GBX 1.54 -
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