City Link cuts 1,000 jobs as losses mount (UK)
The company launched a restructuring programme after being hit by major integration problems in late 2007 and early 2008.
The company launched a restructuring programme after being hit by major integration problems in late 2007 and early 2008.
The company has downsized from 7,600 staff at the start of this year to 6,600 staff at end-October, and has reduced the vehicle fleet by over 10 pct, Rentokil disclosed in its recently-released Q3 figures.
Nevertheless, customer service has remained consistently above the internal target of 98.5 pct, and all aspects of the seven-point recovery plan are going well, it said. But physical unification of the depot/hub network of City Link and Target Express, acquired in late 2006, will remain on hold until management is confident it can be achieved without compromising service, it added.
Meanwhile, City Link’s financial results are being impacted by the worsening UK economy. In the three months ending September 30, 2008, its revenues dropped 13.2 pct year-on-year to GBP 93.4 million (at constant exchange rates). It made an operating loss of GBP 12 million compared to a previous year profit of GBP 11.4 million. Average revenue per consignment (RPC) was down 2.9 pct to GBP 8.08, and volumes were down about 10 pct year-on-year. Over the first nine months of the year, the operator’s revenues were down 8.3 pct at GBP 284.7 million, and it made an operating loss of GBP 41.4 million compared to the previous year profit of GBP 32.8 million.
Looking ahead, Rentokil said that while the softening economy made it increasingly difficult to predict City Link revenue, volumes and traffic mix across the customer base, the forecast loss for the year remained unchanged. “Though year to date trading across seven of our top 10 customers remains well ahead of last year, the majority of customers are trading below last year. We anticipate the seasonal trading spike will occur very late in Q4 as consumers defer decisions on spending as long as possible,” it stated.
City Link would continue to drive a successful execution of its seven-point recovery plan, the parent company said. This involved moving customer service closer to the customer; developing reliable and integrated information systems; improving financial control systems and reporting; optimising hub and depot networks; developing organisational people capability; and capitalising on growth opportunity initiatives.
