Rentokil Initial Plc

Latest Results (18.12.2024):

Revenue Growth

In the first half of 2024, Rentokil Initial Plc reported a 4.0% increase in revenue at constant exchange rates, reaching £2,756 million. On a statutory basis, revenue rose by 1.3% to £2,706 million. The company experienced organic revenue growth of 2.8%, with notable progress in North America, where total revenue increased by 1.1% and organic revenue by 1.3%.

Operating Profit

Rentokil Initial Plc's adjusted operating profit for H1 2024 increased by 4.7% to £455 million at constant exchange rates. Statutory operating profit also saw a rise of 5.6%. The group's adjusted operating margin improved by 10 basis points to 16.5%, with North America's adjusted operating margin slightly ahead of guidance at 18.6%.

Free Cash Flow and Dividends

The company reported a free cash flow of £172 million for the first half of 2024, which was impacted by working capital balances at the period end but is expected to unwind in the second half. Rentokil Initial Plc increased its dividend per share by 14.9%, reflecting confidence in its financial performance and future prospects.

North America Performance

Rentokil Initial Plc made significant progress in its North America growth plan, with a 50 basis points quarter-on-quarter improvement in pest control services organic growth. The region's adjusted operating profit rose by 1.8% to £310 million, and the company committed an additional $25 million investment to harness growth opportunities, focusing on lead quality, sales close rates, and customer retention.

Outlook

For the full year, Rentokil Initial Plc expects to achieve organic revenue growth in North America within the 2-4% range, albeit at the lower end. The group anticipates a net revision of approximately $15 million to its adjusted operating profit, reflecting additional growth investments in the second half. The adjusted free cash flow conversion is expected to remain in the 80-90% range, with further modest deleveraging of the balance sheet.