Rentokil sales growth crawls up as pests put off by cold

Pest control group Rentokil Initial’s underlying revenue growth slowed in the first quarter because of the impact of the hurricane in Puerto Rico and cold weather in the US that delayed the emergence of spring pests.

Organic revenue growth, excluding acquisitions and disposals, was 3.2% in the three months to the end of March compared with 3.7% a year earlier. In the final quarter of 2017 organic growth was 3.1%, Rentokil said in a trading update.

Rentokil said that excluding the impact of Puerto Rico organic revenue growth was in line with the same period a year earlier and it was confident about meeting market expectations for 2018.

Rentokil said: “Organic growth has been affected by the ongoing impact of last September's hurricane on our operations in Puerto Rico … and unseasonably cold weather in the US in March which has delayed the onset of the spring pest season.”

The FTSE 100 company sells pest control services and hygiene products such as air fresheners, soap dispensers and hand dryers, in 70 countries and makes about 90% of its revenue outside the UK.

Group ongoing revenue, which includes acquisitions and excludes sold businesses, increased 15.7% in the first quarter. Ongoing pest control revenue rose 15.8%. Pest control revenue in emerging markets increased 38.2%, driven by strong performance at a joint venture in India.

Andy Ransom, Rentokil’s chief executive, said: "I am pleased with our performance in Q1 and we are well-positioned for another year of successful growth. We are confident that the company will deliver a performance in line with market expectations for 2018."

The company bought 11 pest control businesses in the first three months of 2018 and the Cannon Hygiene business in January. The company said acquisitions were performing well and contributed 12.5% to ongoing revenue in the first quarter.

Rentokil has earmarked £200m to £250m for acquisitions and said it had a strong pipeline of potential deals that would add to value.