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First quarter profit for Rentokil has more than halved compared to last year as the company's delivery business City Link continued to lose money.

Revenue was up 6.6 per cent to £553.6 million for the three months to March 31st 2008, but adjusted profit before income tax fell to £14.6 million from £35.4 million in 2007.

City Link adjusted operating loss of £15.4 million on revenue was down eight per cent, the company said.

Chief executive Alan Brown said: "A number of our businesses are making good progress in growing the top line, developing customer portfolios and reducing termination rates.

"However, we have struggled to implement major change programmes, which has affected our ability to turn top line growth into profit."

Rentokil said it has a plan to restore City Link to operational health but this is "likely to take some time".

Operational efficiency will be the primary focus and improvements in customer service the main indicator of success, Rentokil said.

The company also warned last year's annual dividend of 7.38p would not be supportable based on 2008 performance.

The board said it will review the final dividend at the time of the interim results in August.

Rentokil warned in April that first quarter results would be affected by a loss from City Link.

According to Mr Brown, the division has problems with its network of hubs and depots, whereby parcels are shuttled up from London to Coventry to be sorted out.