Daily Mirror (Northern Ireland)
GRAHAM HISCOTT AA’S given the hard shoulder Shares down £200m after profit warning
THE AA has suffered a £700million breakdown since being flogged by private equity firms that left it loaded with a mountain of debt.
Shares in the roadside assistance and insurance giant crashed 28% yesterday as the company unveiled a plan to “transform” the business.
New boss Simon Breakwell aims to beef up patrol numbers and call centre staff and focus on new technology. But the overdue investment will be costly.
Profits for 2019 are now expected to be in the range of £335m to £345m this year, down on forecasts of £390m to £395m. Dividends will also be capped at 2p a share this year, down from 9.3p previously.
Yesterday’s share price slump knocked another £200m off the AA’S stock market value, taking the total lost since its 2014 market flotation to £700m.
The listing delivered a windfall for private equity owners CVC, Permira and Charterhouse at the time. CVC and Permira brought it from Centrica in 2004 and, after merging it with over-50s specialist Saga in 2007 to form Acromas, left it with £4.8bn of debt. AA and Saga were later split.
The AA still owes £2.7bn, though finance boss Martin Clarke said: “We don’t feel under any pressure.” The AA’S breakdown customer numbers have stabilised at 3.3 million after earlier falls, but the market its growing overall.
Breakwell, a former Expedia executive, plans to target younger members, use fewer costly outside garages at busy times and adopt technology that tells drivers when their car is about to break down.
He said: “I am confident the priorities we set out will transform our products and service offerings to our customers.”
Executive chairman Bob Mackenzie, who helped float the AA in 2014, was sacked last year after a row with Mike Lloyd, who heads the AA’S insurance division.