British parcels carrier City Link saw its losses deepen in the first quarter of this year butparent company Rentokil Initial claimed today it is on the road to recovery under new management.
The company’s revenues rose 1.7 per cent to £73.5 million in the January – March firstquarter of 2012. But it made an adjusted operating loss of £12.7 million, nearly 19 per cent worsethan the first quarter of last year.
“City Link losses were higher than prior year but performance improved through the quarter asthe new management team gained traction. We expect a significant improvement in year-on-yearfinancial performance in the second half,” stated Rentokil CEO Alan Brown.
Rentokil Initial last year recruited two senior executives from Royal Mail to lead therecovery of loss-making City Link. David Smith, a former head of Parcelforce, joined as managingdirector while Robert Peto is the new finance director.
Smith said at a strategy briefing in March that City Link was likely to remain in the red for2012 as a whole, but the target was to reduce losses in the second quarter, to break even in thethird quarter, and to make a profit in Q4.
In 2011, City Link, which has suffered from weak results and management changes in recentyears, ended the year with revenues down 8.5 per cent to £306.9 million. Its volumes fell 3.5 percent and revenue per consignment worsened by 5 per cent. The firm’s adjusted operating loss, beforediverse write-offs and one-off items, widened by 226 per cent to £31.3 million. Losses were alsoimpacted by slow progress on cost saving initiatives and productivity in particular.
