REG - Rentokil Initial PLC - Q1 Trading Update

Rentokil InitialAnnouncement

20/04/2023 07:00

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RNS Number : 8256W  Rentokil Initial PLC  20 April 2023

20 April 2023

 

RENTOKIL INITIAL PLC

FIRST QUARTER TRADING UPDATE

STRONG MOMENTUM CONTINUED WITH ORGANIC GROWTH OF 6.7%

 

           AER(1)                    CER
           Q1 2023  Q1 2022  Change  Q1 2023  Q1 2022  Change

           £m       £m       %       £m       £m       %

 Revenue   1,259    722      74.4%   1,240    754      64.5%

 

 

Trading in the year has started well, with reported Revenue up 64.5%,
reflecting the benefit of M&A, including Terminix, and strong Organic
Revenue(2) growth of 6.7%. Including revenue from COVID disinfection business,
Group organic growth was 5.9%. The performance has been underpinned by
resilient demand and effective pricing, which has continued to offset
inflationary pressures.

 

Regional Overview

 

North America delivered a good performance, with Organic Revenue growth of
4.9%. Strong momentum was sustained in Europe inc. LATAM, the Group's second
largest region (+12.0% Organic Revenue), Asia & MENAT (+10.8% Organic
Revenue) and Pacific (+7.5% Organic Revenue). Even with the anticipated
reduction in COVID related medical waste services, the UK & Sub Saharan
Africa region recorded 4.4% Organic Revenue growth.

 

Category Overview

 

Our Pest Control business delivered Organic Revenue growth of 6.4%. North
America Pest Control recorded 4.9% Organic Revenue growth, driven by a strong
start to the year of c.6.0% in pest control services for our commercial,
residential, and termite customers. This growth was partially offset by the
products distribution business, which has seen a slower start to the season
contributed to by de-stocking across a number of major accounts and adverse
weather conditions across some of our regional markets.

 

Our Hygiene & Wellbeing business, supported by continued good demand for
washroom services, also performed well during the first quarter, with Organic
Revenue up 5.5% (Revenue +6.2%). France Workwear continued its strong growth
rates with Organic Revenue up by 17.3% (Revenue +17.3%) over the period.

 

M&A

 

Delivery of the Terminix integration plan has progressed well in the first
quarter of the year and the cost synergy programme is on track to meet full
year guidance.

 

The Group completed 15 additional bolt-on acquisitions in the first quarter -
12 in Pest Control and 3 in Hygiene & Wellbeing, with combined annualised
revenues in the year prior to acquisition of c.£63m. This included the
acquisition of RK Environmental/Comprehensive Food Safety, a specialist in
pest management services and food safety audit consulting to the commercial
food industry operating in 31 US states. RK had annualised revenues of c.$22m
in the year prior to purchase, ranking #44 on the Pest Control Technology 2022
Top 100 list. We have built a substantial pipeline of high-quality
opportunities and remain confident in our targeted spend of c.£250m in 2023.

 

In March 2023, Rentokil Initial was named as one of Britain's Most Admired
Companies(3) for the quality of its products and services.

 

Commenting on today's trading update, Andy Ransom, Chief Executive, said:

 

"I am delighted with the performance our colleagues delivered in Q1, which
demonstrates the resilience of our compounding growth model and continued
strategy execution. This performance, combined with further progress in our
value-creating M&A programme led by the integration of Terminix, means we
are well positioned for the remainder of the year. We reiterate our 2023 full
year expectations."

 

 

Summary of financial performance (at CER)

 

Regional Performance

 

 

                                                                  Organic Revenue growth excluding disinfection  Organic Revenue growth including disinfection

                               Revenue
                               Q1 2023 £m   Q1 2022 £m            Q1                                             Q1

                                                         Change   2023                                           2023

                                                         %        %                                              %

 North America                 745          320          132.9%   4.9%                                           4.8%
    Pest Control               723          298          142.6%   4.9%                                           4.9%
    Hygiene & Wellbeing        22           22           1.0%     4.2%                                           1.0%

 Europe (inc LATAM)            254          211          20.4%    12.0%                                          10.5%
    Pest Control               120          90           34.2%    11.2%                                          11.2%
    Hygiene & Wellbeing        82           77           6.2%     9.9%                                           5.9%
    France Workwear            52           44           17.3%    17.3%                                          17.3%

 UK & Sub Saharan Africa       94           90           4.5%     4.4%                                           4.3%
    Pest Control               50           45           11.0%    10.5%                                          10.5%
    Hygiene & Wellbeing        44           45           (1.8%)   (1.7%)                                         (1.8%)

 Asia & MENAT                  84           77           9.5%     10.8%                                          4.2%
    Pest Control               62           53           16.8%    11.1%                                          11.1%
    Hygiene & Wellbeing        22           24           (7.0%)   9.5%                                           (11.6%)

 Pacific                       61           54           11.9%    7.5%                                           7.5%
    Pest Control               29           24           21.7%    12.5%                                          12.5%
    Hygiene & Wellbeing        32           30           4.1%     3.6%                                           3.5%

 Central                       2            2            4.7%     -                                              -
 Total at CER                  1,240        754          64.5%    6.7%                                           5.9%
 Total at AER                  1,259        722          74.4%

 

 

 

Category Performance

 

                                                             Organic Revenue growth excluding disinfection  Organic Revenue growth including disinfection

                          Revenue
                          Q1 2023 £m   Q1 2022 £m            Q1                                             Q1

                                                    Change   2023                                           2023

                                                    %        %                                              %

 Pest Control             984          510          93.2%    6.4%                                           6.4%
 Hygiene & Wellbeing      202          198          1.9%     5.5%                                           1.1%
 France Workwear          52           44           17.3%    17.3%                                          17.3%
 Central                  2            2            4.7%     -                                              -
 Total at CER             1,240        754          64.5%    6.7%                                           5.9%
 Total at AER             1,259        722          74.4%

 

 

 

Enquiries:

 

Investors / Analysts: Peter Russell, Rentokil Initial plc, + 44 7795 166506

Media: Malcolm Padley, Rentokil Initial plc, +44 7788 978199

 

 

Notes

 

(1)AER - actual exchange rates; CER - constant 2022 exchange rates

 

(2)Organic Revenue growth represents the growth in Revenue excluding the
effect of businesses acquired during the year and, unless stated otherwise,
exclude COVID disinfection. 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
(pro forma revenue). The Terminix acquisition is treated differently to other
acquisitions for Organic Revenue growth purposes. The full pre-acquisition
results of the Terminix business are included for the comparative period and
Organic Revenue growth is calculated as the growth in Revenue compared to the
comparative period.

 

(3)Britain's Most Admired Companies (https://www.britainsmostadmired.com/)
 measures the reputation of more than 250 of Britain's largest companies
across 28 industry sectors and it has been running since 1990. The survey is
run by Echo Research with the support from academic partners, Coventry
University.

( )

 

 

 

 

 

 

 

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