February 8, 2018 / 10:02 AM / 2 years ago

UPDATE 1-AA stops the rot after executive upheaval

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LONDON, Feb 8 (Reuters) - Roadside recovery firm and insurer AA, aiming to stabilise its business after firing its executive chairman last year, said on Thursday it expected full-year core profit in line with a forecast made in September.

AA shares rose as much as 12 percent before trimming gains to trade up 1.5 percent at 0940 GMT, compared with a steady FTSE mid-cap index.

The shares had tumbled to record lows after AA cut its profit guidance in September following the abrupt departure of its boss Bob Mackenzie last August.

Now led by Chief Executive Simon Breakwell, the company sees trading earnings before interest, tax, depreciation and amortisation (EBITDA) for the year ending Jan 31, 2018 of 390-395 million pounds ($542-549 million).

The company, whose breakdown vans are a familiar sight on British roads, expects to provide a strategy update on Feb 21.

“We are currently reviewing the strategy to ensure that we can continue to build on the strength of our brand and distribution platform,” AA said in a statement.

Liberum analysts said the strategy update “should add flesh to the bones”, reiterating their “Buy” rating on the stock.

Heading into Thursday’s announcement, six investors had short positions in AA that were greater than 0.5 percent of its stock, the level at which Britain’s financial markets regulator the Financial Conduct Authority demands disclosure.

Under a so-called short trade, a hedge fund borrows the stock to sell on, hoping to buy it back later at a cheaper price before returning it to its original holder, often a long-term investor such as a pension fund. ($1 = 0.7195 pounds) (Reporting by Carolyn Cohn and Simon Jessop; Editing by Keith Weir)

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