Shares in marketing collective National Accident Helpline plunged this morning after a gloomy trading update from the company.
NAHL announced to the London Stock Exchange that underlying earnings for 2019 are likely to be between 7.5% and 10% lower than board expectations. This echoed a similarly downbeat assessment from late December, when the company announced the closure of a joint venture amid below-expectation financial results.
Today’s update had an immediate effect on the share price, which fell more than 40% to 57.2p by mid-morning. As recently as mid-December, NAHL shares were trading at 121.5p.
The company had already noted that 2019 had been a ‘challenging year’, with the property market contracting and the group’s residential property division making a small loss.
Despite performing marginally ahead of expectations, NAHL today said its personal injury division also faced competitive pressure and what it termed ‘continued panel volatility’ during the last year. This has resulted in a higher cost of generating new claims which has led to fewer claims being passed through to the group’s ABS structures.
NAHL said ‘considerable uncertainty’ remains in the personal injury sector ahead of potential reforms planned for low-value RTA claims from April 2020 (a start date which remains up in the air).
The statement said the board was encouraged by progress in transforming the business, but in order to ‘de-risk’ the group in the light of market circumstances, it has decided to slow the deployment of working capital in the PI business and to suspend the company’s dividend. Consequently, the board’s outlook for 2020 performance is significantly lower than previous expectations.