Cleaning and pest control group Rentokil Initial PLC (LON:RTO) reported a drop in profits for the first quarter, with the bottom line hit by continuing woes at its UK parcels business City Link.
Pretax profits in the first quarter to end-March 2011 fell 66 percent from the previous first quarter, while revenue inched up 0.4 percent to £609.7 million.
City Link revenue was adversely affected by challenging market conditions and loss of business in 2010, falling to £72.3 million from 83.5 million a year earlier. The business widened its operating loss to £10.7 million from £83.5 million.
Chief executive Alan Brown said: "I anticipate that (City Link's) performance will continue to be poor in Q2 but we expect to see significant improvement in Q3 and that would feed strongly into Q4."
The Pest Control and Textiles & Hygiene businesses are performing solidly in generally tough market conditions.
The Textiles & Hygiene business in the Benelux has stabilised and is trading in line with internal expectations.
Asia Pacific is performing well with portfolio growth in Asia 7.9 percent ahead of Q1 2010. Facilities Services had a strong quarter, benefiting from both acquisitive and organic growth in manned guarding as well as operational improvement, Rentokil added.