Shares of Nationwide Accident Repair plunged 18% after it warned pre-tax profit for the second half and full year is now expected to be below market expectations.
Nationwide said it still expects revenues to remain broadly in line with the prior year.
After its cautious update in September, Nationwide today said, "It is now evident that although Nationwide achieved a marginal increase in its core insurance volumes (against market trend) in the first half, volumes in the second half will be impacted by the continuing decline in insurance claims, with the recent milder weather underscoring this factor."
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The aim quote crash repair services firm said claims for smaller repairs (typically lower sales value but higher margin) are declining at a faster rate than claims for more substantial repairs.
As a result, the group announced a wave of cost-cutting measures, including the potential closure of non-core centres.
This programme will preserve Nationwide's overall operational capacity and will continue to support the board's strategy to build the company's presence in the fleet and retail markets, it explained.
Total one-off costs relating to the programme will be around £7.7m for the current financial year, of which £1.6m will be a cash cost in the current financial year.
When fully implemented, management expects annualised savings of around £1.9m.
Nationwide said its balance sheet remains strong and expects to close the year with substantial net cash of some £4.5m.
A final dividend of 3.5p per share for the year has been maintained, making a full year dividend of 5.4p per share compared to 5.3p in 2010.
"Nationwide's drive into newer non-insurance markets is also developing well and results to date are encouraging," it said.
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