17th Oct 2024 09:14
(Alliance News) - Rentokil Initial PLC on Thursday left full-year guidance unchanged, providing relief to investors after tricky recent trading.
The Crawley, England-based pest control services provider said it expects second half organic growth in the North American business of around 1% and a full-year adjusted operating margin of around 17.2% in the region.
Group adjusted operating profit margin is expected to be around 15.5%. Group adjusted profit before tax and amortisation is expected of around GBP700 million. This would be down 8.6% from GBP766 million in 2023.
Chief Executive Andy Ransom said: "In North America, we recognise the business has underperformed, and we are focused on delivering the operational improvements required. We are expanding our initiatives to increase organic growth and we are taking action to mitigate cost overruns."
Earlier in September, Rentokil warned slower growth in North America and the strong pound would dent full-year profit. It was the latest blow for the firm, which cut guidance in July, and also back in October 2023.
In response to Thursday's more positive update, shares in Rentokil rose 7.4% to 366.30 pence each in London.
Revenue was unchanged at GBP1.38 billion at actual currency rates in the three months to September 30 from a year prior. At constant currency, sales rose 3.6% to GBP1.44 billion from GBP1.39 billion.
Organic revenue grew 2.6%, including continued strength in Europe, UK and Asia, the firm added.
Importantly, North America organic revenue rose 1.4%, as did North America pest control organic sales.
Rentokil said plans to increase North America organic growth and rebalance the cost base have been strengthened since its September trading update.
North America customer retention slightly increased in the period to 80%. Pricing activities continued to be successful in passing cost inflation to customers, the firm said.
Rentokil said actions taken since September's trading update has seen a reduction in headcount of around 250, or USD22 million of annualised cost, in addition to normal ongoing seasonal headcount adjustments.
The firm said it would take stock of the Terminix integration - which continues to go well - in the New Year. This would delay the timing of synergy delivery by about two to three months while the review is completed.
By Jeremy Cutler, Alliance News reporter
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