AA blames cold winter weather for breakdown in profits

The AA has blamed a 65% plunge in pre-tax profits on a surge in demand for roadside help during last winter's cold snap.

It said the number of breakdowns it attended as a result of freezing conditions during the two so-called Beast from the East whiteouts earlier this year amounted to a 15-year high.

The AA said that had an impact on costs in the first half of its financial year, as over 1,900 of stranded members sought help.

Profits came in at £28m from the six months to July - down from £80m in the same period last year.

The AA said total Roadside revenues held up despite an anticipated drop in business and personal memberships due to stronger promotional activity among rivals. Revenue at its insurance division was flat.

Shares (Berlin: DI6.BE - news) - down more than 30% in the year to date - fell a further 3% when trading began on Wednesday.

Chief (Taiwan OTC: 3345.TWO - news) executive, Simon Breakwell, said: "The first half of FY19 (full year 2019) has seen exceptional weather conditions, from extreme cold and snow in February and March to the hottest summer in recent memory, with the severe winter also creating a pothole 'epidemic' on the UK's roads.

"All this led to a 15 year high in the number of breakdowns we serviced.

"Against this backdrop, I am extremely proud of our achievements and to be reporting results in line with our guidance as we continue to build resilience throughout the business.

"We are making good operational progress across our Roadside and Insurance businesses and firmly believe that we have the people and strategy in place to unlock the full potential of the AA (Frankfurt: A116XA - news) and crystallise long term value for our shareholders.

"We remain on-track to meet our Trading EBITDA (earnings before interest, tax, depreciation and amortisation) guidance for FY19 and to return to growth thereafter."