Rentokil Announces Third Quarter Results

LONDON - Rentokil Initial posted a 21 percent rise in underlying third-quarter profit and said its outlook for the rest of this year and next was unchanged.

The firm said proforma profit before tax from continuing operations, before goodwill and at constant exchange rates was $124.1 million in the three months to Sept. 30.

“As we indicated at the time of our interim results in August, profit before tax and amortization has moved strongly ahead during the quarter and is in line with our expectations. The group has continued to build on the progress made during the first half of the year and our outlook for 2007 and 2008 remains unchanged.”

Rentokil said third-quarter growth was driven by its courier, Asia-Pacific and facilities services divisions, while pest control and tropical plants also showed improvements.

In the Rentokil statement regarding third quarter performance, the company reported the following about its pest control division.

“The Pest Control division delivered the expected improvement in performance during the third quarter with increased revenue of 9.1% compared to the same period last year. Organic growth for the quarter was 4.3%. Q3 adjusted operating profit was 2.1% higher than 2006, assisted in part by acquisitions in Spain and the US. Organically the deterioration in UK profits versus 2006 offset the strong performances seen in other markets. In North America the acquisition of Presto-X-Company was completed in July and initial indications are that trading is in line with expectations. Excluding Presto-X, growth in revenue was 6.5% with profit up strongly on the previous year. Despite a slow start to the peak season as a result of unusually cold weather at the beginning of the second quarter, weather patterns normalized over the summer months contributing to strong sales uplift during the quarter. Continental Europe continued to make good progress with a 10.6% increase in revenue giving a 4.5% increase in adjusted operating profit. Organic revenue growth was 4.2% with the remainder delivered by a number of acquisitions in Spain, Finland and Estonia (the division’s first entry into the Baltic region). Some of our mid-sized operations have demonstrated particularly strong organic growth, most notably Spain, Italy, Austria and Portugal. The UK business continued to make progress with good new business performance leading to revenue growth of 2.1% against a decline of 1.3% in Q2. Contract retention rates have further strengthened during the three months to an annualized rate of 81.6% and the contract portfolio has now grown by 2.2% since the start of the year. Profit has lagged revenue growth and was down 10.8% on an adjusted basis in the period although the rate of regression has slowed quarter by quarter this year. Service productivity declined at the start of the year as the business adjusted.”