The breakdown and insurance group said higher investment will hinder profit growth in the short term

The AA said its profits will fall in the current financial year, and said it plans to invest more in its insurance business.

The roadside assistance and insurance group said in a strategy document that it expects earnings before interest, tax, depreciation and amortisation (EBITDA) of beween £335m and £345m for the year to January 2019. That compares with its expectations of £390m-£395m for the year just ended, outlined in a trading statement earlier this month.

The AA said it is targeting annual EBITDA growth of 5-8% from 2019 to 2023. It said it plans to grow its roadside assistance business and accelerate the growth of Insurance with combined incremental investment of £45m in the current financial year.

“These investments, while reducing our short term profitability, are vital to our long term success,” said chief executive Simon Breakwell.

In insurance it said it plans to accelerate growth by targeting new customers and younger drivers, develop more competitive pricing and integrate digital and connected car products and data across the business.

Breakwell said: “The strategic plan I am setting out today will unlock the full potential of the AA by delivering targeted and strategic investment in our people, our products, our systems and operations.

“This plan will deliver front line resource to improve the efficiency, predictability and resilience of our operations as well as investment in game-changing growth drivers - in connected car and Insurance.”