Rentokil boosts revenue on disinfection sales during pandemic
Rentokil’s revenue climbed almost 10 per cent in the third quarter, after strong demand for its hygiene and disinfection services helped offset a slump in pest control sales, and boosted its full-year outlook.
The figures
The Camberley-based ratcatchers saw ongoing group revenue climb 9.8 per cent to £754.6m in the third quarter.
The group said the jump was mainly due to “exceptional growth” in demand for its hygiene and disinfection services, and a return to growth in its pest control division.
Rentokil’s North American division remained its most profitable, posting a 17.4 per cent year-on-year hike in revenue to £343.4m for the period. Ongoing revenue within its UK and Ireland arm climbed 1.4 per cent over the quarter to £80.2m.
The group confirmed it will hand out full-year dividends alongside its preliminary results for the 2020 financial year in February.
Why it’s interesting
Rentokil thanked a significant hike in sales of its hygiene services for its sharp revenue increase. The group saw a 53 per cent jump in its hygiene division over the quarter, marking a return to growth from a lull period over lockdown, when Rentokil was unable “to deliver regular washroom services for a substantial number of closed customers”.
The FTSE 100-listed firm said its pest control arm “demonstrated continued resilience” in the third quarter, after it was designated an essential service in the majority of markets during the pandemic.
Rentokil’s North America pest control operations grew 2.3 per cent in the third quarter, aided by continued demand for residential pest control, while commercial pest control continues to be impacted by temporary business closures.
The group resumed its M&A activity over the last few months, completing six acquisitions in the quarter, five of which were pest control businesses. It said it remained on target to spend at least £100m in the second half of the year, as the group seeks to realise its “substantial pipeline” over the next few months.
Earlier this month, Rentokil confirmed the issue of a €600m (£541m) eight-year bond, priced at its lowest ever coupon of 0.5 per cent. Rentokil said the issue will refinance the €350m 3.25 per cent bond which is set to mature in October 2021 and will be used for general corporate purposes.
The group said “virtually all” of its furloughed staff have now returned to work, while it has reinstated temporary wage waivers issued last quarter for around 5,000 staff.
What Rentokil said
Andy Ranson, chief executive of Rentokil, said:
“The company performed very strongly in the third quarter and today’s results further demonstrate the resilience of our pest control and hygiene businesses across the world. We have consistently delivered year-on-year revenue growth each month since the declines in April and May during the peak of the crisis.
“I would like to express my sincere thanks to all of our 43,000 colleagues for their amazing work and dedication to customers during these challenging times.
“It remains impossible to predict the future development of the Covid-19 pandemic. It could have a direct impact on our trading performance, including resurgence of global cases of Covid-19, new and continued coronavirus restrictions, potential customer insolvencies and bad debt, as well as indirectly depending how demand for our services is impacted by the economic consequences of the pandemic.
“In addition, we anticipate demand for disinfection services will reduce as businesses return to more normal trading conditions and as service frequencies potentially decrease.
“Notwithstanding the above, we are hopeful that the momentum in our core customer base will be maintained through the fourth quarter and this, together with our performance in [the third quarter], means we currently expect the outcome for the full year to be at least in line with expectations.”