AA blames pothole 'epidemic' for profits slump, but that's not the only issue the business faces

Investors are running out of patience with a company that ought to be a reliable performer

The AA has blamed potholes for a slump in earnings (PA)

The AA blamed the potholes that litter Britain’s roads for its hitting a financial one.

Overall pre tax profits fell by 65 per cent, “core” earnings by 17 per cent.

The pothole explanation for that ('a national embarrassment') got the media’s attention, which it was designed to do.

The ‘Beast from the East’ cold snap surely contributed to what was described as an 'epidemic'. Combined with the baking summer that followed, it contributed to the highest level of call outs in 15 years.

With the total number of breakdowns approaching 2m, the AA was forced to rely on third party garages to house vehicles. That proved expensive.

If the operation was otherwise in decent shape, investors would have likely been forgiving.

But the company has wider issues which explains why the shares fell into a black hole.

Increased competition and regulatory issues led to reduced customer retention at the roadside assistance arm. The company promised that an initiative to keep them on board will change that, but still.

Despite refinancing its debt, and giving itself a clear(ish) road ahead on that front, the AA still has a lot on the books, which has been worrying investors and has long been a bugbear for the business. Ditto the considerable boardroom strife it has endured.

There were positives in the numbers for those willing to look for them. Revenues ticked up a bit, a hopeful sign.

The group has taken action to address a pension funding shortfall that was looking alarming. It fell by £154m, although that’s a figure that needs to be treated with a degree of caution because such deficits can be volatile.

The difficulty it faces is that investors are running out of patience.

The AA isn’t a complicated business, nor is it a particularly exciting one. It really ought to resemble a Ford Focus; not flashy but solid and reliable and capable of giving its backers a comfortable ride even in the event that it hits the odd pothole.

Since its private equity owners floated it back in 2014, however, it has more often resembled an East German Trabant.

That explains the share price breakdown.

Its bosses are in a tough spot, and their investors apparent lack of faith doesn't make their job any easier.