Nationwide Accident Repair Services has said that it continues to trade in line with its expectations and maintains a strong cash position, boosted by the mobile repair and glass businesses, which continues to make an increasing contribution to the overall group performance.
However, following completion of a re-tendering process by Aviva, Nationwide will see a significant reduction in the volume of vehicle accident repair work undertaken for Aviva in the second half, as the volumes were awarded on terms that are commercially unattractive to the group. This will result in a shortfall in revenue of around £10m for the current financial year, ended December 2012.
The firm was keen to emphasise that Aviva will continue to support around £5.0m per annum of group revenue and that the changes will not affect capacity across its branch network. The impact of the reduced volume is largely mitigated by the scalability of the group's operating costs and flexible working practices, the company said.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Speaking in a statement, the group said: "With the continuing, and expected, downward trend in motor insurance claims frequency, we remain focused on securing new business in the retail and fleet markets, as well as in the insurance-funded market, and on ensuring that our cost base is aligned with demand.
"In a highly fragmented and difficult market, we are confident that the group strategy of leveraging our integrated offer, market leading position and efficient operating systems will deliver market share gains in the insurance, fleet and retail sectors."
Shares were trading 8.76% lower at 62.5p on Friday afternoon.
Trading terms: The Santa Rally
Glossary Will the Santa Rally result in its traditional December effect on global markets?
By Dr Matthew Partridge Published
Lock in high yields on savings, before they disappear
As interest rates peak, time to lock in high yields on your savings, while they are still available.
By Ruth Jackson-Kirby Published