City Link: Q1 2010 Trading Update
City Link’s adjusted operating loss of £4.4m is £1.7m better than the corresponding loss in Q1 2009 but was negatively impacted by high sub-contractor costs. Revenue declined by 1.8% but is in line with plan. The company’s Q1 revenue dropped 1.8% to £83.5 million even though volumes improved by 2.2%. However, the market remains extremely competitive and severe price cutting has continued across the industry into Q1. Revenue per consignment (RPC) weakened by 4.0% on the prior year.
City Link’s customer base has been broadly stable throughout the first quarter of the year with the majority of its major customers up trading modestly. Apart from periods of heavy snow, service has remained consistently above our 99% target.
As part of its depot rationalisation programme City Link has closed four depots during Q1 (from 84 at year end to 80) and is on track to migrate from two Hubs to one by the end of the first half. Vehicle fleet numbers have fallen by 3.5% since the end of 2009 and total employee numbers have fallen below 5,300, a 7.6% reduction since December 2009.
City Link said it is reviewing the balance between employee drivers and sub-contractors given the experience with sub-contractor costs during Q1.
