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Rentokil profits hit by City Link's takeover of Target

6th March 2008, Page 8
6th March 2008
Page 8
Page 8, 6th March 2008 — Rentokil profits hit by City Link's takeover of Target
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by David Harris THE FULL EXTENT of the problems encountered by parcels group City Link in the wake of its takeover of Target Express became clearer last week as parent company Rentokil shocked the City with a profit warning.

City Link accounts for a fifth of Rentokil Initial's .E2.2bn revenues and the company admitted that its parcels company's performance in 2007 had been "unacceptable". Rentokil says City Link may not do any better than break even in 2008. It also revealed last week that the merger of City Link and Target depots would be put on hold pending a review. City Link's sales and marketing director Stuart Godman says this means several big cities, including Leeds, Manchester, Glasgow and Swansea, will continue to have two depots operated by the company.

He adds: -January 2009 is the earliest we will restart any programme to bring the depots together."

However, he also says that 90% of Target vehicles have now been rebranded, so most of those that operate from old Target depots will be in City Link livery.

The poor performance of City Link in 2007 was largely to blame for a 14.1% fall in Rentokil Initial's pre-tax profits in 2007. In the fourth quarter City Link had operating losses of £13.4m, against a £14.3m profit the year before.

On the announcement of the results Rentokil shares fell 23% to 80.5p.

Tags

People: Stuart Godman
Locations: Manchester, Glasgow, Leeds

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