Rentokil narrows City Link loss

Recent strikes have not proved a windfall for Rentokil Initial’s City Link delivery business

Recent postal strikes have not proved a windfall for Rentokil Initial's troubled City Link delivery business, the firm has said.

Rentokil "has benefited indirectly and to a modest extent" since the end of September as existing customers switch more traffic to City Link - but the company also complained about the high costs involved with sudden surges in demand.

The Communication Workers' Union has held a series of strikes in a row over modernisation but called off its latest industrial action.

Losses at City Link narrowed sharply to £1.3 million in the three months to September 30 - compared with £11.6 million a year earlier - after a major cost-cutting drive.

Rentokil predicts a £7 million loss for the parcels firm this year, lower than the £12 million originally forecast.

It has closed 12 City Link depots and cut more than a third of vehicles from its fleet since December - slashing staff numbers by almost a fifth to 5,500.

The firm said the overall trading climate remained tough but posted pre-tax profits between July and September of £42.3 million adjusted for exchange rates - 82% up on the same period last year. Revenues across the group were down 3.2% on a constant currency basis.

Chief executive Alan Brown said: "We anticipate a further quarter of good delivery in Q4 despite few signs of economic recovery in our major markets."

Rentokil's attention has also been focused on turning around its pest control business, where profits were up 2.3% during the period.

In the UK, the business achieved its best customer retention rate since the beginning of 2008, and also posted its highest sales to small business clients since before the recession began.