There has been quite a buzz about Rentokil (RTO) recently as the pest control expert has spruced up its growth credentials. Back in 2014, constant-currency revenue growth was 3 per cent, by 2015 that had risen to 6 per cent, and in the first half of this year it hit 11 per cent. That transformation has not gone unnoticed by the market, with the shares climbing a third last year and by a similar amount again so far this year.
A sharper focus on higher-growth areas, most notably North American pest control, has been a key part of this success. Adjusted operating profit from North America surged almost 65 per cent in the first half as recent acquisitions bore fruit. Chief executive Andy Ransom says North American pest control has huge potential, with a climate that pests like and people with money to spend on eradicating them. He says Rentokil's innovations such as the recently announced tie-up with Google should allow it to clean up in what remains a very fragmented market.
The workwear business has less going for it. Adjusted operating profit fell 14 per cent in the first half as tough European markets, most notably France, weighed. But Mr Ransom says workwear is cash generative and remains an important part of the group.
Analysts at JPMorgan expect full-year EPS of 10.0p, up from 8.3p in 2015.
| RENTOKIL (RTO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 213.8p | MARKET VALUE: | £3.91bn | |
| TOUCH: | 213.7-213.9p | 12-MONTH HIGH: | 217p | LOW: 139p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 17p* | NET DEBT: | £1.18bn | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 843 | 70.2 | 3.05 | 0.87 |
| 2016 | 980 | 80.4 | 3.56 | 0.99 |
| % change | +15 | +15 | +17 | +14 |
Ex-div: 11 Aug Payment: 14 Sep *Includes intangible assets of £935m, or 51p a share | ||||
