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Rentokil Initial hikes dividend and reduces debt amid strong results

27th Jul 2023 11:47

(Alliance News) - Rentokil Initial PLC on Thursday reported strong increases in half-year revenue and profit, partly thanks to acquisitions, allowing the pest control company to declare a higher dividend while still reducing debt ahead of schedule.

Rentokil shares were up 2.0% to 651.60 pence in London on Thursday morning.

Pretax profit in the six months that ended June 30 was GBP240 million, up 48% from GBP162 million a year before, on GBP2.67 billion in revenue, up 70% from GBP1.57 billion.

Crawley, West Sussex-based Rentokil said revenue benefited greatly from acquisitions, particularly the USD6.7 billion purchase of US pest-control business Terminix Global Holdings Inc. However, it also recorded organic revenue growth of 5.9%, including 4.1% growth in North America and 11% in Europe.

"Rentokil Initial has a clear strategy to deliver growth and margin expansion," it said. "Alongside the delivery of the Terminix integration, we expect continued good underlying trading in the remainder of the year, underpinned by our resilient business model and supportive, structural growth drivers."

Rentokil said its expects a full-year group adjusted operating margin of 16.5%, improved from 16.3% in the first half. In North America, it expects this to be 19.5%, up from 18.5%.

The company also said it is deleveraging faster than expected. It expects net debt to earnings before interest, tax, depreciation and amortisation to be about three-times by the end of 2023, a year ahead of schedule.

Net debt stood at GBP3.27 billion on June 30, down from GBP3.30 billion on December 31, though up from GBP1.45 billion a year ago.

By Tom Waite, Alliance News editor

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