City Link Sales Improve, But Profits Continue To Fall

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Struggling UK parcel shipping firm City Link saw its sales increase by 1.7% in the first quarter of the year under its new management structure, however its losses for the quarter increased by £2m.

City Link losses for the quarter up to the end of March 2012 rose by 18.7%, when compared to the same period last year.

The company achieved £73.5m in revenue for the first quarter, but saw operational losses for the quarter spiraling to £12.7m.

City Link, which has employed Royal Mail Parcelforce executives David Smith and Robert Peto as new MD and finance director respectively, have already invested £1.9m in the companies reorganisation during the first quarter, which it points out almost matches its additional losses during that time.

Parent company Rentokil Initial, which operates in the pest control and textiles sectors, said the companies new management team was beginning to work well, thanks to better pricing and cost reductions.

Alan Brown, the Rentokil CEO, said last week that City Link had had a dreadful January, citing in particular very unusual trading conditions for that period.

However, Mr. Brown insisted the companies performances had improved in February and March as prices stabilised, leaving City Link in very good shape heading into the 2nd quarter with some of its larger business to consumer customers agreeing higher prices across its entire service offering range.

Speaking on behalf of City Link, Mr. Brown said, “It has now clearly sunk home among the B2C market that you cannot continue to trade at current price levels in the marketplace,” said Brown. “There’s a certain effort from the players, particularly those making significant losses, to redress the market pricing.”

City Link has been seeing good results following its change to pay subcontracted drivers per job rather than per day.