More deliveries woe for Rentokil Initial

Apr 21 2008

Business services firm Rentokil Initial warned today that its troubled City Link delivery business would make “significant” losses this year after a worsening performance.

Rentokil said problems with the merger of its City Link and Target Express operations - as well as weak trading - had plunged the business into bigger than expected losses during the first quarter of the year.

City Link racked up operating losses of £16.9 million during the first three months of the year, compared to £10 million of profits for the last quarter of 2007. Revenues also slid £12 million to £96 million during the period.

Previously Rentokil, which brought in a trio of former ICI directors last month to try and revive its fortunes, said City Link would break even this year.

But new chief executive Alan Brown said: “The return of City Link to its former levels of profitability is likely to take some time.”

In February, Rentokil’s previous management warned “unacceptable” performance from the unit would see group pre-tax profits fall significantly below 2007’s £142 million.