Rentokil on track for FY after encouraging Q3, US performance improves

(Sharecast News) - Rentokil surged on Thursday as it said it was on track to meet full-year market expectations after an encouraging third-quarter performance and pointed to improved trading in North America. In the period from 1 July to 30 September, group revenue came in at $1.81bn, up 4.6% on the same period a year ago. Organic revenue growth was 3.4%.

Revenue in North America was up 4.6% to $1.14bn, with organic revenue growth of 3.4%. Organic revenue growth in the North America pest control business was 1.8%, versus just 0.1% growth in the first half.

In the international segment, revenue also rose 4.6%, to $673m. It was up 3.3% on an organic basis. The performance in international was driven mainly by the UK, with continued strong performance in the core UK Pest control and Plants businesses and an improved performance from the Property Services division.

Across the rest of the international businesses, Europe remained strong, driven by the southern Europe markets of Spain, Portugal and Greece.

Rentokil said growth in the Pacific remains below the average for International, with good growth in core Pest Control and Ambius offset by the impact of adverse weather on its Rural and Trackspray businesses.

Chief executive Andy Ransom said: "We are encouraged by our performance in the third quarter as the overall positive trends we described at our interim results have continued into the second half.

"In North America, it is pleasing to see the actions we have taken to improve sales execution and to evolve our digital marketing strategy are driving positive lead flow and overall sales momentum in the quarter. Our satellite branch openings remain on track to reach 150 by the end of the year, we have re-commenced the gradual integration of commercial branches during the quarter and our cost efficiency programme is on track.

"Current trading is in line with expectations and our outlook for the remainder of the year remains unchanged, as such, we expect to deliver FY 2025 financial results in line with market expectations."

At 0955 BST, the shares were up 10.7% at 450.90p.

Russ Mould, investment director at AJ Bell, said: "Rat-catcher Rentokil surged after saying its US operations were in a much better place. The company had previously suffered from slower than expected growth in North America, causing investors to question if the 2022 acquisition of US pest control firm Terminix was ill-timed.

"A new game plan appears to be working, and Rentokil is now more upbeat on the region."