Rentokil Initial Q3 profit up but still problems in Libya

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Presenting their trading results for the third quarter of 2010 (ending 30 September 2010) Rentokil Initial plc reported that although revenue was flat year on year, adjusted profit before tax was up 16%.

Rentokil Initial

In the presentation of the results on 5 November 2010, Alan Brown, chief executive officer of Rentokil Initial, said: “We have delivered 16% profit growth in Q3 despite some setbacks arising in part from tough market
conditions, but also from high sub-contractor costs in City Link. Pest Control in particular has delivered
good profit growth driven by strong performances in both the UK and US.”

The report detailed that pest control in the UK continued to improve. Profit grew 18.6% on revenue growth of 2.3%. Jobs growth has been a major driver of recovery with a 12% uplift on Q3 2009 with contract sales also growing by 3.2%. Retention improved by 2.5% to 76.8% but was held back by the loss of some national accounts, largely on price, offsetting significant improvement in retention of SMEs.

Pest control remains Rentokil”s third largest operating sector, accounting for 21% of revenue in Q3. A copy of these results in-full can be seen by clicking here.

Readers will recall that Rentokil Pest Control is involved in Libya on a three-year, £24 million government contract to control chronic rat problems in Tripoli, Benghazi and Misratah. See Pest issue 4 – click here. Mr Brown reported that this contract performed well but the timing of payments remains variable, saying: “We expect this to be an ongoing feature of this contract.”

These problems of Libya ratting on payment terms were picked-up by the national press – see the report in The Daily Mail click here.

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