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AA not “materially” impacted by coronavirus crisis

The motoring group expects further uncertainty in the market

AA PLC - AA not “materially” impacted by coronavirus crisis

AA PLC (LON:AA.) rose on Tuesday after announcing the suspension of the final dividend as it defers operating costs to limit the coronavirus crisis impact on trading.

The motoring group said it was not impacted “materially” by the outbreak though it has brought uncertainty on the market.

READ: AA sees its roadside recovery unit return to growth

The car insurer and driving school has put safety measures in place, including home working, though the emergency contact centre in Oldbury remains open.

At the end of January, the group had £149mln in the bank and an available facility of £50mln.  

For the year ending on 31 January, revenue rose 2% to £995mln while profit before tax rocketed 102% to £107mln.

House broker Liberum cut the target price to 50p from 130p though it said AA is “more resilient” to the crisis than most.

However, analysts identified "a variety of ways" in which the group could be affected, such as difficulty to keep existing customers and get new ones for the roadside business, while less traffic and fewer car sales could hit the business-to-business segment.

Driving school activity could also be reduced by heightened social distancing measures.

Shares advanced 6% to 17.54p on Tuesday morning.

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Quick facts: AA PLC

Price: 34 GBX

LSE:AA.
Market: LSE
Market Cap: £211.59 m
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