City Link begins company turnaround

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Express operator City Link has reported a “positive impact” on service performance following the implementation of its seven-point recovery plan highlighted in its pre-close trading statement.

The company posted an operating loss of £16.9 million on 2nd May for the first quarter of 2008, compared to a profit of £9.3 million the previous year, owing to the difficulties it experienced after the acquisition of Target Express.

The company said: “Customer relationships have improved, attrition has slowed and overall service levels have been restored.”

However, despite the improvement in service for the Rentokil Initial-owned company, revenue has weakened during the second quarter, which City Link says is indicative of “weakening demand generally” rather than customer losses.

The company has identified key areas in which it could save that are expected to deliver payback within the next 12 to 18 months, although this will have a limited impact on results in 2008.

Internal forecasts of losses at City Link have also now stabilised.

The seven-point plan to turn the business around included:
* Re-instituting a service orientated culture by ensuring customer services are in close proximity to its customers.
* Establishing operating systems that enable information to be shared across the combined network, reliably and securely.
* Establishing control systems and processes that enable transparency of information and enable central control of costs, where appropriate, rather than the dispersal of costs and controls across each of the 94 depots.
* Reviewing the size, number and location of hubs and depots.
* Right-sizing resources to match the cost base to current levels of revenue.
* Considering how to capitalise on the growth opportunities in the parcels market; in particular the growth of B to C driven by internet purchases.
* Ensuring that the organisation has the capability to drive this agenda efficiently and effectively.

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