Rentokil Initial missed its quarterly profit forecasts yesterday thanks to continued losses at its parcels arm City Link. The pest control and washrooms company said City Link's losses were nearly £25m in the first nine months of 2011, including £6.8m in the most recent quarter, due to "extremely competitive" market conditions and the loss of business in 2010.
It is confident of an improved City Link performance in the fourth quarter but its shares dropped 3 per cent to 66.3p as analysts expressed frustration at the pace of the turnaround.
Mike Murphy, an analyst at Numis Securities, said: "Given their wretched forecasting for this division, investors would be forgiven for waiting for the promised package to arrive."
Outside of City Link, trading in the third quarter was broadly in line with expectations, although Rentokil downgraded forecasts for cost savings this year to between £50m and £55m, from £60m previously. Overall profits were 13 per cent lower at £36m in the quarter.