Rentokil sees US performance 'marginally below' previous expectations

19th Oct 2023 08:23

(Sharecast News) - Services group Rentokil Initial said on Thursday that its full-year performance in North America was set to be 'marginally below' its previous expectations, citing "near-term market uncertainty".

Rentokil said third-quarter revenues were up 53.3% overall at £1.38bn and 4.3% on an organic basis. Organic revenue growth of 9.5% was reported in Europe, 8.9% in Asia & MENAT, 7.6% in the Pacific, and 5.2% in the UK and Sub-Saharan Africa.

In North America, organic revenues were 2.2% higher in the three months ended 30 September, reflecting a "softer consumer demand environment" than seen elsewhere. Rentokil noted that while customer retention rates remained "resilient", new residential customer acquisition was "challenged" by the current macroeconomic backdrop and a "softer consumer demand environment".

The FTSE 250 group now anticipates that near-term market uncertainty will result in the region's full-year performance being "marginally below" previous expectations. Reflecting the impact on revenue, it also expects regional adjusted operating margins to be in the range of 18.5%-19.0%.

Chief executive Andy Ransom said: "The group delivered a good overall performance in the third quarter. We have a proven, effective strategy to deliver organic growth, focused on strong customer relationships and service quality.

"In addition, the portfolio effect of our global business operating in multiple markets enables us to weather regional headwinds. The strong fundamentals of our operations are further enhanced by our value-creating M&A programme."

As of 0820 BST, Rentokil shares were down 10.93% at 529.80p.

Reporting by Iain Gilbert at Sharecast.com