City Link chief makes surprise exit

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Rentokil City Link chief makes surprise exit
The departure of Petar Cvetkovic comes midway through a programme designed to revive the company’s fortunes

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Rentokil Initial was rocked today by the surprise resignation of Petar Cvetkovic, managing director of City Link, the services group’s parcel delivery unit.

Mr Cvetkovic’s departure comes midway through a programme designed to revive the company’s fortunes, which have fallen on hard times largely due to the parcels business, and just two weeks before the group is due to report second quarter results.

His sudden exit is understood to be amicable and in no part related to recent trading at City Link, despite suggestions otherwise in the industry. Because he resigned he will not receive any special payout.

In an internal memo to staff the company merely said that Mr Cvetkovic was leaving on September 1 to “pursue interests outside Rentokil”. It is believed that he already has another job lined up outside the sector.

He will be replaced by Stuart Godman, City Link’s head of sales and marketing, who joined the company with Mr Cvetkovic from Target Express in November 2006 after Rentokil bought the group.

Mr Cvetkovic became managing director of City Link in February 2008 as part of an overhaul of the unit’s management amid mounting losses due to lost contracts and poor service levels, which have only recently shown signs of abating after four profit warnings.

Troubles integrating Target eventually resulted in both Brian McGowan, Rentokil’s former chairman, and Doug Flynn, its former chief executive, being ousted. Alan Brown, the former chief financial officer of ICI, was brought in as chief executive, and former ICI boss John McAdam became chairman. Both were given lucrative incentive schemes.

Mr Brown was offered an incentive package worth up to £31.5 million and a £775,000 salary if he could triple Rentokil’s share price in five years.

He is now in the process of implementing a comprehensive three to five-year recovery plan across the business and reiterated in May that City Link would more than halve losses this year to less than £20 million compared with a loss of £43.5 million in 2008.

In May, the company, whose activities span pest control, office plants, washroom hygiene and parcel delivery, reported pre-tax profits before one-offs of £21.6 million for the first three months of the year. That was up 16.1 per cent on the same period last year and comfortably ahead of City forecasts.

The results raised hopes the group’s long-awaited recovery was finally underway, although many in the City still remain sceptical, given that management face a particularly tricky task putting their own house in order amid the backdrop of the recession.

The parcel industry’s plight was highlighted further yesterday when City Link’s peer Business Post reporting revenues down 4 per cent in the second quarter. However, it did say that, while still suffering, its parcels business had seen an improved trend in underlying volume and revenues and that the improvement was encouraging.

Rentokil shares closed up 3.25p, or 3.9 per cent, to 87.25p.