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'Pothole epidemic' and cold winter hits AA profits 'Pothole epidemic' and cold winter hits AA profits
(about 1 hour later)
Bad road conditions and extreme weather in the UK have led to a drop in profits at the AA. Bad road conditions and extreme weather in the UK have contributed to a drop in profits at the AA.
The motorists' organisation saw its pre-tax profit decline 65% to £28m for the first six months of 2018. The motorists' organisation - which has increased investment into its services - saw its pre-tax profit decline 65% to £28m for the first six months of 2018.
AA boss Simon Breakwell said the severe winter caused a "pothole epidemic", which contributed to breakdown callouts hitting a 15-year high. AA boss Simon Breakwell said the severe winter caused a "pothole epidemic", which led to breakdown callouts hitting a 15-year high.
Shares in the company fell more than 10% in London on the news.Shares in the company fell more than 10% in London on the news.
AA said the decline in profits was also due to increased investment in its services.
The firm had previously warned that drivers and insurers were losing £1m a month repairing damage caused by potholes.The firm had previously warned that drivers and insurers were losing £1m a month repairing damage caused by potholes.
AA shares fell sharply in February, after it warned that its full-year profit would fall short of analysts' expectations.AA shares fell sharply in February, after it warned that its full-year profit would fall short of analysts' expectations.
Despite the fall in half-year profits, AA said it was still on track to deliver on the renewed guidance.
An unusually high number of breakdowns this year has driven up costs for AA.An unusually high number of breakdowns this year has driven up costs for AA.
The number of breakdowns between January and July increased by 8% to 1.9m and to meet demand, the company had to call on third-party patrols.The number of breakdowns between January and July increased by 8% to 1.9m and to meet demand, the company had to call on third-party patrols.
However AA benefited from an increase in roadside sales of products and services to help drivers deal with the cold weather.However AA benefited from an increase in roadside sales of products and services to help drivers deal with the cold weather.
Overall revenue at AA grew a modest 2%, to £480m.Overall revenue at AA grew a modest 2%, to £480m.
The company, which says it has a "traditional 50-year plus core demographic" has struggled to attract younger customers, who either do not own cars or are unwilling to pay for roadside assistance.The company, which says it has a "traditional 50-year plus core demographic" has struggled to attract younger customers, who either do not own cars or are unwilling to pay for roadside assistance.
In an attempt to remedy this, the AA has invested in an app and its Car Genie digital device, which is installed in members' cars and can alert the driver to potential motor problems before a breakdown occurs.In an attempt to remedy this, the AA has invested in an app and its Car Genie digital device, which is installed in members' cars and can alert the driver to potential motor problems before a breakdown occurs.
The hope is that such digital products will appeal to younger customers.The hope is that such digital products will appeal to younger customers.