Rentokil Initial's weak performance last year had already been well signposted by an earlier gloomy trading update. But the shares still slipped 4 per cent on the day of these results after the pest control and courier group delivered another disappointing set of figures.
Rentokil's woes largely reflect the troubled City Link courier operation, where operating losses ballooned from £9.6m in 2010 to £31.3m, with turnover there declining 8.5 per cent to £306.9m. New management is expected to make progress in addressing cost control issues, but the damage has already been done and management conceded that the division's poor performance was behind a decision to write down the business by £146m. City Link was also responsible for the group missing 2011's £60m cost saving exercise by £16m, although targeted savings of £50m remain in place for the current year.
There was better news from the textiles and hygiene operation where operating profit edged ahead 4.5 per cent, with a 3.5 per cent profit gain achieved in pest control. However, profit improvements were held back by commodity price increases and a weak performance in Italian and UK markets.
Investec Securities expects adjusted pre-tax profit of £200m for 2012, giving EPS of 7.9p (£184.4m and 7.5p in 2011).
| RENTOKIL INITIAL (RTO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 77p | MARKET VALUE: | £1.4bn | |
| TOUCH: | 76-77p | 12-MONTH HIGH: | 102p | LOW: 58p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | na | |
| NET ASSET VALUE: | * | NET DEBT: | £919m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 2.20 | 142 | 6.10 | 7.38 |
| 2008 | 2.41 | 23.0 | 0.76 | 0.65 |
| 2009 | 2.53 | 65.0 | 2.63 | nil |
| 2010 | 2.50 | 14.5 | -1.29 | nil |
| 2011 | 2.54 | -50.5 | -3.84 | 1.33 |
| % change | +2 | - | - | - |
Ex-div: 8 Apr Payment: 15 May *Negative equity shareholders' funds | ||||
