Major British parcels carrier City Link has cut about 1,000 jobs so far this year and reduced itsvehicle fleet by 10% under its ongoing recovery plan, which is making “excellent progress”,
according to parent Rentokil Initial. But its losses grew during the third quarter due to theslowing UK economy.The company, which launched a restructuring programme after being hit by major integrationproblems in late 2007 and early 2008, has downsized from 7,600 staff at the start of this year to6,600 staff at end-October, and has reduced the vehicle fleet by over 10%, Rentokil disclosed inits recently-released Q3 figures.
Nevertheless, customer service has remained consistently above the internal target of98.5%, and all aspects of the seven-point recovery plan are going well, it said. Butphysical unification of the depot/hub network of City Link and Target Express, acquired in late2006, will remain on hold until management is confident it can be achievedwithout compromising service, it added.
Meanwhile, City Link’s financial results are being impacted by the worsening UK economy. Inthe three months ending September 30, 2008, its revenues dropped 13.2% year-on-year to £93.4million (at constant exchange rates). It made an operating loss of £12 million compared to aprevious year profit of £11.4 million. Average revenue per consignment (RPC) was down 2.9% to£8.08, and volumes were down about 10% year-on-year. Over the first nine months of the year, theoperator’s revenues were down 8.3% at £284.7 million, and it made an operating loss of £41.4million compared to the previous year profit of £32.8 million.
Looking ahead, Rentokil said that while the softening economy made it increasinglydifficult to predict City Link revenue, volumes and traffic mix across thecustomer base, the forecast loss for the year remained unchanged. “Thoughyear to date trading across seven of our top 10 customers remains well ahead of lastyear, the majority of customers are trading below last year. Weanticipate the seasonal trading spike will occur very late in Q4 asconsumers defer decisions on spending as long as possible,” it stated.
City Link would continue to drive a successful execution of its seven-point recovery plan,the parent company said. This involved moving customer service closer to the customer;developing reliable and integrated information systems; improving financial control systems andreporting; optimising hub and depot networks; developing organisational people capability; andcapitalising on growth opportunity initiatives.
