AA says strategy to overhaul business is on track
In its latest results, the breakdown specialist, which floated on the stock market last year, said that the rate of decline in its roadside assistance members slowed but the rise in insurance premium tax had hit its motor insurance business.
It added that it had made excellent progress with its plans to overhaul its IT systems with a £128m investment, which was announced in March.
Bob Mackenzie, executive chairman, commented: “On IPO we set ourselves three objectives: to turn the AA into the UK’s pre-eminent motoring services organisation, to revolutionise customer experience through investing and embracing new technology and, finally, to reduce group borrowing and the associated interest cost.
“I am pleased to report early and positive signs that our strategy will deliver our expectations of the AA brand. Our Roadside Assistance advertising was launched in June and has been well received. This together with changes to our product offering, pricing and marketing, is showing encouraging new sales, improving retention and slowing the decline in Personal Member numbers. Our digital development is making good progress with take up of the app growing monthly.
“There is a great deal still to be done, particularly relating to the revenue increases and cost reductions which are contingent on the introduction of our new IT systems.”
He added: “While good progress has already been made, most of our transformation initiatives are dependent on the new IT systems and will be enabled once those systems are in place next year. However, ahead of that, we will continue to improve retention and slow the rate of decline in Personal Members, reinforcing what we have achieved so far this year. With the majority of the diagnostic technology and advertising spend in the first half, we believe we are on track to meet expectations for the full year.”
Mackenzie concluded: “With the anticipated returns on our investment in IT and brand marketing, we expect the transformation to deliver benefits in cost reduction and revenue growth in the medium term.”