Rentokil Initial lowers FY profit guidance, shares head south

Pest-control business Rentokil Initial shares headed south early on Thursday after the group pointed to issued lower full-year profit guidance as a result of a heightened level of investment in H2.

Rentokil said on Thursday that interim revenues rose 1.3% to £2.7bn, of 4% at constant exchange rates, while pest control revenues grew 2.2%, with North American revenues up 1%.

The FTSE 100-listed group said interim pre-tax profits increased 1.8% to £383.0m and stated it had decided to hike its H1 dividend 15% to 3.16p.

However, looking forward, Rentokil warned that organic revenue in North America would be at the lower end of 2-4% guidance, and also noted that a net $15.0m revision was expected to be made to FY group adjusted operating profits to reflect additional growth investment during H2.

Chief executive Andy Ransom said: "We remain focused on our plans to create the world's leading pest control company. Our business continues to benefit from global operations in attractive, structural growth markets, enabling another good group performance in the first half of the year.

"Four months into our new Right Way 2 plan, we are now beginning to see encouraging early signs of operational and financial improvement. Building on this foundation, we are making an additional $25.0m investment as we prioritise organic growth opportunities, alongside delivery of the integration. We look forward to further progress on these and continued good group momentum in the second half of the year."

As of 0855 BST, Rentokil shares were down 7.20% at 439.60p.

Reporting by Iain Gilbert at Sharecast.com