City Link cuts losses in half, but revenue slides

UK parcel carrier City Link has cut its losses almost in half in the past year, and says it is expecting the turnaround to continue with more investment. The Coventry-based company said yesterday that it made a £14m loss in the financial year 2013, but this was a £13.5m improvement over 2012.

The carrier acquired by private equity firm Better Capital in April 2013 did see its revenues fall by £36m (11%) in its latest 12 months, to £285.7m, but said this was because it has taken the deliberate step to drop loss-making accounts.

When it bought the business, Better Capital pledged £40m investment to bring City Link back into the black. The company said today that after 16 months of upgrading the business, its parent has stated the intention to provide additional funding to continue the turnaround.

Upgrades in the business have included a new hybrid automation system at the Coventry hub to improve throughput, development of a new delivery notification feature called On Our Way, and a full review of the company’s IT system.

“Bright future”

Dave Smith, the City Link chief executive, said the 2013 results represented a “great step forward” for his company, even if the turnaround is still ongoing.

“We are not there yet,” he said, “but the continued support of Better Capital — both in terms of the investments made so far and in terms of future commitments — means that we will complete our turnaround story and that this business and our customers have a bright future to look forward to together.”

City Link has a fleet of more than 2,500 vehicles and a network of more than 60 depots across the UK. The company claims to deliver 76m items a year.

Better Capital bought the business for £1 in April 2013 from the services company Rentokil Initial.