Contract wins set to boost AA’s profits

ROADSIDE ASSISTANCE firm the AA has said full-year profits are set to come in at the top half of expectations as major contract deals help offset falling membership.

The group said full-year underlying trading earnings are expected to be “not less than” £340m thanks to a solid performance across its roadside and insurance divisions.

The AA had previously guided for underlying trading earnings of £335m to £345m.

But this still marks a sharp fall on the £391m reported for 201718 and comes after it saw a 65 per cent plunge in interim pretax profits to £28m as extreme weather sent breakdowns soaring.

In its latest update, the AA said paid roadside assistance personal memberships fell by around 2 per cent to 3.2 million over the year to January 31.

The group, which reports fullyear figures on April 3, blamed the decline on competition, regulatory pressure and changes to its summer marketing campaign.

But the AA hopes to return to roadside membership growth by 2020-21.

It saw average income per member increase by about 3 per cent to £162 as more customers took up monthly subscriptions and chose higher levels of service.

The group was also buoyed by a raft of major customer renewals for roadside assistance with the likes of Volkswagen, Lloyds Banking Group, Jaguar Land Rover and Suzuki.