Shares in pest control and courier group Rentokil Initial rose 6 per cent as its troubled City Link division reported volumes up 14 per cent year on year and management now expect the beleaguered courier business to return to profitability in the fourth quarter. Overall underlying group pre-tax profits were flat at £73.5m for the first six months of the year, although reported results were lifted by lower one-off costs associated with the City Link restructuring.
Chief executive Alan Brown said Rentokil had achieved savings of £22.1m in the first half, and with savings weighted towards the second half he expects to beat this year's £50m target after missing last year's £60m cost saving target by £16m. Mr Brown remains confident of refinancing the significant debt pile in the coming 18 months.
Group revenue inched ahead through a number of bolt-on acquisitions in Canada, the US and Brazil. In the core textiles and hygiene, and pest control divisions, which combined are responsible for around two-thirds and all of the operating profit, both revenue and operating profit growth declined in the second quarter.
Broker Panmure Gordon expects adjusted full-year EPS of 8.1p (7.4p in 2011).
RENTOKIL INITIAL (RTO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 75p | MARKET VALUE: | £1.4bn | |
| TOUCH: | 75-75.5p | 12-MONTH HIGH: | 91p | LOW: 58p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | na | |
| NET ASSET VALUE: | * | NET DEBT: | £960m | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1.25 | 29.7 | 1.26 | |
| 2012 | 1.26 | 46.6 | 1.93 | 0.67 |
| % change | +1 | +57 | +53 | - |
Ex-div: 12 Sep Payment: 26 Oct *Negative shareholders' funds | ||||
