Slump for AA drives profits downto£194m

THE AA will reveal profits of £194 million this week as it tries to arrest declining customer numbers.

The roadside assistance group is set to unveil revenues of £461 million for the first half of the year on Wednesday. Profits will be slightly lower than the £199 million seen in the first half of 2015.

The AA has since sold its Irish business.

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 3.67million 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 £2.8 million and sold its Irish business for €156 million 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.