Rentokil profits tumble

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Although total group revenue was up 6.6 per cent to £553.6 million, the group's City Link business managed to make a loss of £15.4 per cent in the first quarter, following an 8.0 per cent drop in revenue at the business.

Rentokil said that the new City Link management team were making "some progress in addressing operational problems" and that service levels were "showing early signs of improvement".

Alan Brown, chief executive officer of Rentokil, 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.

"We have outlined our plan to restore City Link to operational and financial health but returning the business to its former levels of profitability is likely to take some time. The group agenda is now to focus on operational excellence and efficiency, with improvements in customer service being the primary indicator of success in the short-term.

"Our current annual dividend totalling 7.38 pence per share for 2007 is not supportable based on 2008 performance. The board will review the 2008 dividend payout at the time of the interim results in August. There is no change to the final recommended dividend for 2007."