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Rentokil Initial chief executive Alan Brown today pledged to return its City Link delivery arm to profit in the last three months of this year but admitted the division has seen little pick-up in business from the postal strike.
The pest control-to-parcels group has trimmed losses at City Link from £11.6 million a year ago to £1.3 million in the three months to the end of September.
Rentokil has reduced its prediction for annual losses at the division from £12 million to £7 million, meaning it will record a profit for the three months to December.
Brown also said he believes the arm will be profitable next year. However, Brown said that City Link has seen “less than a 5%” uptick in trade because of the Royal Mail strike, with parcel volumes down 3.5% year on year and a 9% drop in revenues to £85.1 million.
The improvement has been achieved through cost-cutting, with the division shedding 18% of staff since December last year and a reduction in the number of its depots from 97 to 85.
Rentokil admitted trading remains “challenging” in all its businesses with total sales at the company down 3.2% to £622.6 million when the benefits of currency movements are stripped out.
But profits before tax jumped 81.5% to £49.6 million thanks to a major cost-cutting programme.
