Car insurer AA’s profits plunge 65% as breakdowns hit 15-year high

Bad weather over the winter led to a 'pothole epidemic', AA boss said, which helped drive increase in breakdowns

Motorists’ organisation the AA has blamed this year’s bad weather for a 65 per cent drop in profits, as the number of breakdowns serviced by the company rose to a 15-year high.

The group reported pre-tax profits of £28m in the six months to July, down from £80m in the same period of 2017, while operating profit fell 35 per cent to £116m.

Revenue rose by 2 per cent to £480m, which the group said was in line with expectations.

Simon Breakwell, chief executive of the AA, said the poor results were due to the “exceptional weather conditions” in the first half of the year, “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”.

The so-called Beast from the East brought heavy snow to the UK this spring, while the weather swung to the other extreme with a prolonged heatwave over the summer.

“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,” he said

“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 and crystallise long-term value for our shareholders.”

Mr Breakwell said the company expects to return to growth after 2019.

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