Rentokil to impose hiring freeze at City Link

[theflyingpostman]

http://www.telegraph.co.uk/money/main.j ... kil114.xml

By Dominic White
Last Updated: 2:02am GMT 14/12/2007

Rentokil is to impose a hiring freeze at City Link after weak Christmas trading at the parcels business prompted a profit warning that caused the group's shares to slump 22pc.

Doug Flynn, Rentokil chief executive, said he was surprised by the magnitude of the share price fall as he spent £23,000 buying shares as a sign of confidence. The shares closed down 32.4 at 114.3p, their lowest level for more than 12 years, on news that consumers had ordered less Christmas deliveries.

''I'm certainly surprised but it's a very jittery market," said Mr Flynn. ''Many other parts of our business are not broadly affected by consumer behaviour. This remains a very defensive stock, though you wouldn't think so today."

Rentokil said business-to-business operations at City Link had been significantly ahead of last year, but business-to-consumer operations had slipped due to weaker consumer spending. "As a result, fourth-quarter profits from City Link are likely to be up to £10m below our expectations. This will have a similar impact on the results for the group as a whole," it said in a statement.

Analysts had been expecting operating profits of about £22-£23m for the division in the fourth quarter but cut those forecasts and full-year forecasts for the group.

"We believe a slowing economy may impact other parts of the group in 2008... Its businesses are much more sensitive to economic conditions than other sector stocks such as Capita, Serco, VT etc," Panmure Gordon analysts said in a note. The warning came just one month after it said that City Link had continued its strong performance with 140pc growth in revenue, buoyed by a robust business-to-business operation and the acquisition of Target Express in late 2006.

City Link gets about 70pc of its annual revenues from the business-to-business market and the remainder from the business-to-consumer segment, delivering items such as phones, cameras and flat-screen TVs for high street and internet retailers.

Mr Flynn said the company would need to keep a ''very tight control of costs" next year at City Link, which employs about 7,000 staff. He said Rentokil did not yet know what longer-term impact a consumer slowdown would have on City Link.

[prowler]

If you think pay and conditions are bad at RM, get a job with citylink to find out what s**t jobs are really like!

[dvbuk55]

My daughter works for a firm owned by Rentokil - it closes for good on 21st Dec - the land has been sold for development -housing - as if we need more there must have been 10,000 houses built in the last 5 years in this area and they are still clodding em up.

[Lounge Lizard]

If you think pay and conditions are bad at RM, get a job with citylink to find out what s**t jobs are really like!

Indeed.

[dvbuk55]

If you think pay and conditions are bad at RM, get a job with citylink to find out what s**t jobs are really like!

Indeed.

They went into liquidation yesterday.

[Gold Fox]

City Links regular customers..... will Royal Mail pick em up ??

[Lounge Lizard]

If you think pay and conditions are bad at RM, get a job with citylink to find out what s**t jobs are really like!

Indeed.

They went into liquidation yesterday.

Hence my comment at 11.23pm yesterday.