Remember when we said shares of the AA hit an all-time low? Well, now there’s an even deeper low for the insurance and breakdown provider, which itself has revealed a dismal outlook.
A report by Alliance News described the troubled roadside assistance firm as “languishing” at the bottom of the FTSE 250. On Wednesday, the AA saw its shares crash to a new low of 81.10 pence in early trade before closing down 28%.
The insurer’s trading woes followed an announcement about its not-so-promising profit expectations. On top of its profit warning, the AA has also unveiled a dividend cut.
Core profit is now forecast to reach not more than £345 million come next year – well below the previously expected £395 million. As for dividend payments, there will be a huge drop from 2017’s 9.3 pence, even lower than the five pence per share for 2018.
“We are committing to paying two pence per year in subsequent years until such time as free cash flow and profitability gets us to a position where the board can justify higher dividends,” chief financial officer Martin Clarke told Reuters.