Losses rise at City Link

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Losses increased at parcel carrier City Link in the first quarter – up from £4.4m to £10.7m on sales that fell 133.4 per cent to £72.3m

The company blames the losses on lower customer volumes in the first quarter and by additional costs incurred in January to recover from the heavy snow conditions in late December.

Parcel volumes were down ten per cent on the prior year as a result of customer losses in 2010 and a weaker economic climate.

However, it said strong progress has been made in addressing the operational weakness that impacted the 2010 results. A detailed operating plan for all parts of the business has been established to address the operating cost base, customer care agenda and IT.

“The usage of subcontractors is decreasing with further decreases planned for Q2, and a detailed contingency plan to deal with extreme conditions is being communicated to major customers.”

Alan Brown, chief executive of City Link’s parent group Rentokil Initial, said: “The UK parcels market was particularly challenging during quarter one. City Link will continue to deliver poor financial performance in quarter two, but I anticipate an improvement in quarter three based on strong operational progress since February, plus major improvements in information technology and customer care.

“Together, these are driving a differentiated position for City Link in the UK market. This has resulted in a promising new business pipeline which is anticipated to come on stream in late quarter two and early quarter three.”

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