Growth slows for pest-control firm Rentokil following acquisition boom
Pest-control firm Rentokil posted nearly two per cent of revenue growth this morning to £722m.
Pest Control delivered organic growth of 5.5 per cent in the first quarter with all regions in positive growth.
Ongoing Revenue in the Growth and Emerging markets grew by 10.9 per cent and 13.6 per cent respectively. Customer retention was also robust at 85.3 per cent, in line with full year 2021.
North America Pest Control, its largest pest control business, demonstrated further strong momentum, growing ongoing revenue by 11.2 per cent, driven by both residential and commercial revenue growth.
Growth also came in the form of acquisitions and it acquired 11 businesses in the first quarter. Ten in Pest Control and one in Hygiene & Wellbeing – in Chile, Colombia, Hong Kong, Poland, Malaysia, New Zealand and the US, with combined annualised revenues in the year prior to acquisition of around 20m.
Rentokil also affirmed that the Terminix acquisition was progressing well and remains on track to complete in the second half of 2022.
Like all companies, Rentokil experienced inflationary increases on cost base in the first quarter, such as labour, fuel, consumables and paper.
However, input cost inflation has entirely recovered by price increases, marking confidence moving forward.
Commenting on the results, Steve Clayton, fund manager of the Hargreaves Lansdown Select UK Growth Shares fund said: “This statement shows why Rentokil deserves a premium rating in the stock market. So many other companies are struggling with the impact of inflationary pressures, but Rentokil’s customers value the services they provide so highly that the group can raise its own prices to cover its higher input costs, preserving its own margins in the process.”