AA suspends dividend to brace for possible coronavirus blow
Repair firm the AA today cancelled its 2019 dividend as it sought to protect itself from the coronavirus outbreak.
The company said it has not yet seen any impact from coronavirus, but suspended its final dividend at it outlined multiple future risks. Investors will still receive an interim dividend payment of 0.6p per share.
The AA warned of potential disruption to operations, telling investors “there can be no certainty as to the future impact”.
Instead the FTSE All Share firm is now seeking to defer or reduce operating costs and capital expenditure to limit any impact to its underlying profit and cash flow.
It has also closed all its offices save for its Oldbury call centre, telling most staff to work from home amid the coronavirus crisis.
“The AA has proved resilient through previous economic downturns and the steps we are now taking will help us maintain that resilience,” the company said. “The management team has successfully turned the operational and commercial performance of the AA around in the last two years and remains focused on navigating the challenges ahead.”
The AA counted £149m in cash at the start of 2020 and £50m in loans.
Profit before tax for the year to the end of January doubled to £107m from the year before, while revenue increased two per cent to £995m. Earnings per share soared along with profit from 6.9p in 2018 to 14.1p for last year.
More drivers turned to the AA’s motor insurance offering last year as policies grew 19 per cent to 869,000. And home insurance policies inches up two per cent to 844,000, which the AA credited to more marketing and renewals through an in-house underwriter.
Memberships to its roadside repair division rose 0.2 per cent to 3.2m drivers, with an 80 per cent customer retention rate. And average member income rose two per cent to £165, while average business customer income climbed five per cent to £22.