Rentokil profits soar as parcels arm trims its losses

By GRAEME EVANS AND GARETH MACKIE
Published on 03/08/2012 09:19

Pest control and cleaning services group Rentokil Initial today reported a 75 per cent leap in first-half profits as the turnaround at its City Link parcels business continued.

Shares in the company rose 4 per cent in early trading as it revealed City Link should be profitable in the fourth quarter of this year.

Rentokil’s bid to revive the business has benefited from a new management team’s push to improve driver productivity, supported by better route handling.

Its depot network has also been consolidated with a reduction of three sites in the first half, helping cut City Link’s operating loss for the second quarter by 18 per cent to £5.3 million. Revenues were up by 5.3 per cent to £76m.

Chief executive Alan Brown said: “City Link’s recovery plan is progressing in line with expectations, both in terms of financial performance and underlying action plan.

“We expect losses to reduce further in the third quarter and for the business to be profitable in the fourth quarter.”

Across the group, profits were up 75 per cent at constant exchange rates to £46.6m for the first six months of the year, helped by a reduction in one-off and reorganisation costs.

An interim dividend of 0.67p per share was declared.