Rentokil finally catches the City Link rat

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The Independent Online

Alan Brown, the chief executive of Rentokil, yesterday claimed the long wait for a turnaround in the disappointing performance of its parcels business City Link is over.

"We expect a significant improvement in year-on-year financial performance [at City Link] in the second half," he said.

Not quite yet, though: the royal ratcatcher's small 1.1 per cent rise in adjusted, pre-tax profit to £26.3m for the three months to April was again hamstrung by still-widening losses at City Link, up 19 per cent to £12.7m for the quarter.

Mr Brown blames City Link's problems on productivity: unlike rivals, the firm pays its subcontracted staff for time spent, rather than deliveries made.

Last year, he appointed a new boss and finance director of City Link from rival Parcelforce, and the Rentokil boss said: "Performance improved through the quarter as the new management team gained traction."

The City, however, wasn't as easily impressed: the shares slipped 4 per cent, or 3.5p, to 83.1p. That's despite Rentokil's largest business, textiles and hygiene, posting an 8 per cent rise in operating profit, thanks mainly to strong trading in France, Germany and Benelux.

Elsewhere, more pest-control work in the UK and north America wasn't enough to stop a 4.4 per cent decline in operating profit at the division to £18.9m.

Rentokil said that the decline stems from slow business in southern Europe.