Wednesday 11 December 2019 3:58 pm

AA shares leap as firm plans bond buyback

Shares in motoring association the AA jumped 15 per cent today after the company announced a possible share buyback after a positive first half.

The company, which provides insurance, driving lessons and breakdown cover also said it intends to pursue a range of debt tenders, redemptions and issuances over the coming months.

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At 15:45 shares were trading at 50p, up nearly 7p on its opening price.

In a trading update, the firm announced that it had maintained its momentum for the full year and expected earnings and cash flow to be in line with market expectations.

The update is welcome relief for investors. Earlier this year the company issued a profit warning after profit fell 60 per cent.

The AA slashed its dividend from 5p to 2p as profit fell to £53m.

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Michael Hewson, chief market analyst at CMC Markets, said that the rebound “appears to be predicated on the basis, that having had a torrid year, the outlook appears to be stabilising.”

The firm said it would issue another statement on 11 February. Full year results are expected on 31 March 2020.