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Rentokil North America boss offloads £1.2m in shares

Rentokil Initial set to outline how it can benefit from greater interest in hygiene post-pandemic
Rentokil North America boss offloads £1.2m in shares
  • Rentokil Initial North America boss sells £1.2m in shares, his second major sale since August 2020
  • Hygiene and pest control company set for earnings growth even as Covid-19 hygiene rush drops off

Plague has joined pandemic as another catastrophe for 2021, although thankfully for the world this was just mice infestation in Australia rather than the Black Death 2.0. The rodent plague did, however, leave pest control and hygiene group Rentokil Initial (RTO) looking like Nostradamus, given an Australian business was part of its large run of acquisitions in 2020. 

The company surfed a Covid-19 wave over the past year, increasing adjusted earnings by 8 per cent as infection control spending overcame a slowdown in office demand. The hygiene and pest control company was trading at record highs at the end of 2020, getting close to 600p, but has since dropped back to around 500p. 

Overall, the pest control division is the company’s largest and most important. But it is hoping to hold on to the disinfectant growth seen last year. Management has announced a capital markets day for September with the title ‘Hygiene: the Next Pest Control?', so has given itself plenty of time to work this out. 

The outlook for this year is for operating profits from hygiene to dip from £173m in 2020 to £145m, according to consensus estimates compiled by FactSet, while sales for the division are forecast to climb 1 per cent. 

Rentokil North America managing director John Myers picked this environment to sell 250,000 shares in the company, for £1.2m. This is his second major share sale in 12 months. Myers sold 225,000 shares in August 2020, also reaping £1.2m from the earlier transaction. 

The company did not respond to a request for comment. 

Rentokil has solid earnings prospects even as the world happily looks to be on a less Covid-19-affected path. Buy at 492p. 

Last IC View: Buy, 473p, 4 Mar 2021

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