City Link losses rise in third quarter

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City Link has reported higher losses in the third quarter as a result of lower volumes and price competition. The operating loss of £6.8m was £5.5m worse than 2010 on a £6.4m (7.9 per cent) reduction in revenue.

However, it expects sales to pick up in the next quarter and into 2012.

Parent group Rentokil Initial said that throughout 2011 the business had been affected by lower volumes arising from customer losses in 2010.

“Third quarter volumes declined 5.5 per cent year on year. Price cutting continues to be an ongoing market dynamic and revenue per consignment declined by 3.5 per cent.

“While the market remains extremely competitive, we are particularly encouraged by the strength of the new business pipeline (well in excess of £50m) and by the conversion of approximately £25m of leads into new customers.”

Sales for the first nine months were down 11.7 per cent to £218.9m while the operating loss rose from £6m to £24.6m.

Rentokil Initial said revenue projections for City Link had improved significantly for the fourth quarter and 2012.

“We anticipate the financial performance of the business will also improve in Q4, assuming no repetition of the very unusual weather conditions in Q4 2010. In addition, the new business pipeline for 2012 is very strong. More progress is however required on productivity.”

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