City Link returns to profit in Q4
Rentokil Initial’s UK delivery arm City Link made a profit of £2.7m in Q4 2009. Its financial results for 2009 showed that City Link’s operating loss of £5.6m overall is £37.9m better than the corresponding loss in 2008, despite a £28.8m reduction in reported revenue to £353.1m.
The business returned to profitability in Q4 2009 posting a profit of £2.7m – £6.7m better than the corresponding period in 2008. Revenue declined by 7.5%, impacted by difficult economic conditions, pricing competition and the full year effect of poor service in 2008. Q4 revenue was £15.8m (19%) higher than Q3 reflecting the seasonal sales uplift, and £3.7m (3.8%) ahead of Q4 2008, with particularly strong growth in the B2C business.
Volumes were down 3.1% on 2008 and revenue per consignment (RPC), weakened by 4.5% on the prior year.
City Link’s customer base has been broadly consistent throughout the year although many are trading at lower levels. The market has been extremely competitive during 2009 with severe price cutting by competitors in order to drive volumes through their networks, the company said.
City Link’s improved loss performance has been driven by cost savings of £54m in 2009. This was achieved through depot closures (97 to 84 by year end) and reductions in vehicles and headcount. Vehicle fleet numbers are a third lower than this time last year and total employee numbers have fallen below 5,500, a 16% reduction since December 2008. Plans to migrate from two Hubs to one will be implemented by the end of H1 2010.
Apart from periods of heavy snow in early February and early December 2009, customer service remained above the 98.5% target. The restoration of customer call handling at depots was completed early in the year and has been met with very positive customer feedback.
“The roll-out of new hand-held scanners and an upgraded route scheduling tool has underpinned improved productivity and customer service. The functionality of the new scanners has been expanded to allow delivery drivers to capture real-time customers’ door and parcel images. This latter feature will further aid electronic, real-time proof of delivery. Additional improvements include the recently re-launched City Link web site which has been very positively received by customers,” said City Link in a statement.
