AA (AA) H1 2025 earnings summary

Executive summary

• Delivered strong H1 2025 results with 14% revenue growth, 9% adjusted EBITDA growth to £225 million, and a 70% increase in profit before tax to £39 million, marking the fourth consecutive year of growth.

• Strengthened balance sheet through the Stonepeak transaction, redemption of £155 million B Notes, and a credit rating upgrade on A Notes from BBB- to BBB.

• Customer base expanded, with roadside customers up 7% to 14.4 million and insurance gross written premiums up 27%.

• Significant progress in business transformation, including IT re-platforming, digital propositions, and operational upgrades.

• Entering H2 with strong momentum, emphasizing cash generation, debt reduction, and continued profitable growth.

Financial highlights

• Group revenue grew 14% year-over-year to £712 million; adjusted EBITDA up 9% to £225 million; operating profit increased 32% to £127 million.

• Profit before tax rose 70% to £39 million; profit for the period was £29 million, up 81% year-over-year.

• Free cash flow increased 74% to £33 million, supported by strong trading and working capital management.

• Net debt reduced to £1,994 million, down from £2,174 million at FY24; leverage ratio improved to 4.5x from 5.1x.

• Operating cash flows reached £190 million, up from £174 million in H1 24.

Outlook and guidance

• Positioned for continued growth in H2, with a focus on expanding driver services, maintaining strong trading momentum, and delivering a strong full-year performance.

• Focus remains on disciplined growth, balancing investment, cash generation, and continued debt reduction.

• Expect to see finance cost benefits from recent debt redemptions in H2.

• Confident in retention of key B2B accounts and further growth in Home Insurance and Accident Assist businesses.

• Transformation strategy continues at pace, leveraging momentum from H1 results.