Market report: More wrong under bonnet for AA as broker throws spanner in works

With the AA still bruised from the departure of boss Bob Mackenzie, one broker added insult to injury today by delivering a crushing blow.

Credit Suisse downgraded the FTSE 250 company to Underperform, predicting worse down the road for the breakdowns firm.

Shares in the AA slammed into reverse on the news. Mackenzie, who hoarded the chief executive and chairman roles, was sacked for an alleged “Jeremy Clarkson”-style punch-up with a colleague.

Credit Suisse’s Daniel Hobden was upbeat on Mackenzie’s departure. He argued splitting the chief executive and chairman roles will be “a positive development for enhanced governance”.

However, the analyst was “cautious” about the possibility that the new boss could kick off a strategic review and need more cash for marketing.

He also flagged the risk of a severance settlement and additional legal costs if Mackenzie challenges his dismissal. His family claims he resigned and admitted himself to hospital with mental health problems.

Investors were also irked last week by “erratic work patterns” in the first half of the year, which the AA said had hit its financial performance.

Hobden was gloomy on fixing the problem. “We believe a solution to the inherently unpredictable nature of call-out demands on patrols is unlikely in the near term.” The shares slumped 13.4p, or 6.7%, to 187.6p.

The FTSE 100 took its lead again from the to-ing and fro-ing from mining shares. The sector was down on weak exports and imports in China, the metals-hungry superpower, pushing the blue-chip index down 10.76 points to 7521.18.

But the biggest fallers were in other sectors. Bookie Paddy Power Betfair, reeling from the shock resignation of boss Breon Corcoran, fell a further 426p, or 5.6%, to 7124p after its interim results.