Rentokil Initial PLC Q1 Trading Update (3888L)

TIDMRTO

RNS Number : 3888L

Rentokil Initial PLC

19 April 2018

RENTOKIL INITIAL PLC (RTO)

FIRST QUARTER TRADING UPDATE

19 April 2018

 
 (GBPm)                 Q1 2018      Growth 
                            AER     AER     CER 
 Ongoing Revenue(1)       545.9   10.8%   15.7% 
 Revenue                  550.7   -5.1%   -1.5% 
 

Overview

Trading has started well across our businesses in Q1 with Ongoing Revenue increasing by 15.7%.

Organic Revenue(2) Growth of 3.2% compares to Q1 2017 at 3.7%* (3.1% Reported) and Q4 2017 (3.1%). Organic growth has been affected by the ongoing impact of last September's hurricane on our operations in Puerto Rico (as previously highlighted at the time of our Preliminary results) and unseasonably cold weather in the US in March which has delayed the onset of the spring pest season. Excluding the impact of Puerto Rico, 2018 Q1 Organic growth is in line with Q1 2017.

Acquisitions have performed well contributing 12.5% to Ongoing Revenue in the first quarter.

Ongoing Revenue in Pest Control grew by 15.8% (4.7% Organic, Q1 2017: 5.6%, Q4 2017: 4.9%) with Growth markets growing by 12.4% and Emerging markets increasing by 38.2%, reflecting the strong performance of our joint venture in India.

Q1 2018 Hygiene Ongoing Revenue rose by 29.3% (1.8% Organic, Q1 2017: 3.4%, Q4 2017: -0.2%), driven by the acquisitions of Cannon Hygiene and CWS Italy.

Ongoing Revenue in our Protect & Enhance markets declined by -0.1% (-0.3 Organic, Q1 2017: -0.9%, Q4 2017: 1.0%) due to ongoing market weakness in our UK Property Care business, offset by a stronger performance from our French business.

While currency markets remain volatile, our guidance for the adverse impact of foreign exchange on profit is in the range of GBP10m to GBP15m for the year, as previously guided at the Preliminary results on 1 March 2018.

M&A

In the three months to 31 March 2018 we made 11 pest control acquisitions (five in North America with annualised revenues of $27m) in addition to the Cannon Hygiene businesses acquired in January. Combined annualised revenues of the 12 businesses acquired was GBP103.0m in the year prior to purchase. Our guidance for M&A spend remains in the range of GBP200m to GBP250m which will be funded by cash held on the balance sheet at the beginning of the year. We are encouraged about our prospects for further M&A this year and our pipeline of value-enhancing opportunities is strong.

Commenting on today's announcement Andy Ransom, 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."

Enquiries:

 
                              Rentokil 
 Investors       Katharine     Initial 
  / Analysts:     Rycroft      plc        07811 270734 
 
                              Rentokil 
                 Malcolm       Initial 
 Media:           Padley       plc        07788 978 199 
 
 
 

(1) Ongoing Revenue represents the performance of the continuing operations of the Group (including acquisitions) after removing the effect of disposed or closed businesses.

(2) Organic Revenue represents the growth in Ongoing Revenue excluding the effect of businesses acquired during the year. Acquired businesses are included in organic measures in the year following acquisition, and the comparative period is adjusted to include an estimated full year performance for growth calculations.

*In Q1 2017 the Company reported Organic growth of 3.1% in Q1 but noted that excluding the businesses transferred to the Haniel JV, the Organic growth figure would have been 3.5%. We have further adjusted this number to exclude the eight French flat linen laundries sold to RLD in H2 2017, which results in a revised comparative number for Q1 2017 of 3.7%.

AER - actual exchange rates; CER - constant 2017 exchange rates

This announcement contains statements that are, or may be, forward-looking regarding the Group's financial position and results, business strategy, plans and objectives. Such statements involve risk and uncertainty because they relate to future events and circumstances and there are accordingly a number of factors which might cause actual results and performance to differ materially from those expressed or implied by such statements. Forward-looking statements speak only as of the date they are made and no representation or warranty, whether expressed or implied, is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Other than in accordance with the Company's legal or regulatory obligations (including under the Listing Rules and the Disclosure Guidance and Transparency Rules), the Company does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Information contained in this announcement relating to the Company or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance. Nothing in this announcement should be construed as a profit forecast.

This information is provided by RNS

The company news service from the London Stock Exchange

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April 19, 2018 02:00 ET (06:00 GMT)