Rentokil warns on profit


Rentokil warns on profit
Shares in services group Rentokil fell in early trading after the company warned its fourth-quarter profit was likely to be lower than expected.

In a trading update the company confirmed a disappointing performance by its overnight express courier business City Link was to blame for the development.

Rentokil, which was founded as a pest control business, said an expected increase in parcel delivery volumes in the run up to Christmas had been smaller than anticipated.

"As a result fourth quarter profits from City Link are likely to be up to £10 million below our expectations," the company confirmed.

"This will have a similar impact on the results for the group as a whole."

Rentokil repeated its assertion the slowdown in parcel delivery volumes to consumers was a "direct result of weaker consumer spending in a challenging retail environment".

In its third-quarter update last month the company had already confirmed slower growth for City Link's business-to-consumer operations, despite business-to-business trading remaining strong.

The company, which became Britain's second-biggest parcel deliverer last year following the acquisition of Target Express Holdings Ltd, said at the time it believed the slower growth was part of an industry-wide trend.

Meanwhile, Rentokil confirmed the takeover was continuing to deliver savings benefits ahead of plan.

The company said trading across its other divisions remains in line with expectations.

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