City Link invests in £2.5m North-West hub

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Parcel firm City Link has celebrated its return to the black with a £2.5m investment in a new regional hub, as it looks to cement its new-found profitability in 2010.

The multi-million-pound deal to create an 870,000ft² regional hub on the Applethorne Industrial Estate in Warrington will be followed later by the launch of a similar hub site in Peterborough.

This comes on the back of an announcement two weeks ago that the firm is to close its Wednesbury, West Midlands hub and switch the operation to Coventry.

On top of this, the firm will also spend millions of pounds this year on updating its depot network as it starts its integration programme again.

City Link currently has 84 sites and will look to reduce this to around 60. However, where there is duplication in the network following the 2007 purchase of Target Express, both depots may be merged into a new site.

Managing director Stuart Godman says: "We have the integration to go for in 2010. We have already integrated two [depots] this year, and the customers haven't noticed. We are trading back in profit now - we have stopped losing money."

For the year ended 31 December 2009, City Link saw its operating loss cut to £5.6m against a loss of £43.5m in 2008, despite turnover falling 7.5% to £353.1m.

It returned to profit in Q4 2009, registering an operating profit of £2.7m against a loss of £4m in the same period a year earlier.
Godman says the turnaround is down to hard work: "It's really been about efficiency and, more importantly, getting the service levels right.

"We are a much leaner and fitter business than we have been for a number of years."

He reveals that the company is looking for modest growth in 2010 with revenue of between £355m and £360m.

"We want profitable growth, not just top-line growth. It's all about the quality of revenue to improve the bottom line," he adds.