Pest control business Rentokil Initial (RTO) spent £369m on 23 acquisitions last year, a significant increase on 2014, when it spent just £68.1m on its buy-and-build strategy. Most of that difference is down to one very large transaction completed in the final quarter; the purchase of North American pest control business Steritech for just under £278m. North America is the world's largest pest control market, worth approximately $7.5bn (£5.4bn); Rentokil grew revenue there by 16.8 per cent last year, or 2.7 per cent excluding acquisitions.
While it's good news across the Atlantic and "a very similar story in Asia", according to chief executive Andy Ransom, things are tougher in Europe, especially France. It's a twofold challenge: the French economy is "low growth and very weak" while the "political and social climates is difficult too." It's also "extremely competitive" as far as the group's workwear business is concerned. Revenue there slipped 3.2 per cent last year, largely due to trading conditions in France and Benelux.
Analysts at Peel Hunt are reviewing 2016 forecasts, but previously expected pre-tax profit of £230m and EPS of 9.7p, compared with £198m and 8.3p in FY2015.
| RENTOKIL INITIAL (RTO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 168p | MARKET VALUE: | £3.06bn | |
| TOUCH: | 168.1-168.4p | 12-MONTH HIGH: | 168p | LOW: 127p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 12p* | NET DEBT: | £1.1bn | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 2.50 | -51 | -3.8 | 1.33 |
| 2012 | 2.20 | 108 | 3.9 | 2.10 |
| 2013 | 1.80 | 112 | 4.5 | 2.31 |
| 2014 | 1.74 | 163 | 7.0 | 2.59 |
| 2015 | 1.76 | 159 | 6.8 | 2.93 |
| % change | +1 | -3 | -2 | +13 |
Ex-div: 7 Apr Payment: 18 May *Includes intangible assets of £818m, or 45p a share | ||||
