Rentokil Initial misses boost from Post strike

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http://www.tradingmarkets.com/.site/new ... s/2633660/

Nov 06, 2009

(Evening Standard - McClatchy-Tribune Information Services via COMTEX) -- RKLIF | Quote | Chart |
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Rentokil Initial chief executive Alan Brown today pledged to return its City Link delivery arm to profit in the last three months of this year but admitted the division has seen little pick-up in business from the postal strike.

The pest control-to-parcels group has trimmed losses at City Link from GBP11.6 million a year ago to GBP1.3 million in the three months to the end of September.

Rentokil has reduced its prediction for annual losses at the division from GBP12 million to GBP7 million, meaning it will record a profit for the three months to December.

Brown also said he believes the arm will be profitable next year. However, Brown said that City Link has seen "less than a 5 percent" uptick in trade because of the Royal Mail strike,
with parcel volumes down 3.5 percent year on year and a 9 percent drop in revenues to GBP85.1 million.

The improvement has been achieved through cost-cutting, with the division shedding 18 percent of staff since December last year and a reduction in the number of its depots from 97 to 85.

Rentokil admitted trading remains "challenging" in all its businesses with total sales at the company down 3.2 percent to GBP622.6 million when the benefits of currency movements are stripped out.

But profits before tax jumped 81.5 percent to GBP49.6 million thanks to a major cost-cutting programme.