The AA: Rising insurance premiums help revenue surge but profits slashed
Rising insurance premiums helped revenue at The AA surge to almost £1.3bn but its profits were slashed by more than 40 per cent.
The group has posted a total income of £1.298bn for the year to January 31, 2024, up from £1.173bn in the prior 12 months.
Its insurance revenue grew from £677m to £759m while turnover from other streams also rose from £496m to £539m.
However, newly-published accounts for The AA show its pre-tax profits over the same period were cut by more than 40 per cent from £71m to £42m.
The AA said that revenue in its roadside business increased by seven per cent while the fall in its pre-tax profits largely driven by higher finance costs and one-off adjusted operating items from the ongoing investment into the business, including £15m of Stonepeak transaction fees and AA’s investment into its connected car capability.
The full-year figures come after The AA reported half-year profits of £23m, down from £40m in a “challenging economic and competitive environment”, with earnings in its primary roadside recovery business hit by cost inflation.
But half-year revenues across the group rose 10 per cent to £625m in the six months to July, driven by growth in customer numbers and higher average income per member.
Chief executive Jakob Pfaudler said: “FY24 was a milestone year for The AA, with strong financial results, the completion of the first phase of our strategy and investment from a new shareholder.
“The achievement of a third year of membership, revenue, and EBITDA growth reflects the transformation of our business since FY21 and showcases our momentum, despite continued external pressures.
“We have continued to improve our financial health and the planned investment from Stonepeak reflects the progress we have made.
“We are delivering against our extended strategy for accelerating growth, focused on driving continued profitable growth from the core business, expanding into a broader range of driving services, and enhancing our use of data and digital to ensure that we continue to serve our customers’ evolving needs.”