Rentokil returns to growth after activist investor scuffle

Pest-control company Rentokil has reported an uptick in revenue as it grapples with the after-effects of a profit warning and activist investor backlash.

The firm told markets this morning that revenue grew by 3.6 per cent year on year in the three months to 30 September, from £1.39bn to £1.44bn.

Shares in the company rose nearly eight per cent in early trades.

Its North American arm reported revenue growth of 1.4 per cent year on year, with Europe up 4.7 per cent and Asia up 6.5 per cent.

However, currency headwinds curbed overall revenue. Growth at actual exchange rates was flat year on year, at £1.38bn.

Last month, Rentokil shares plunged after the group issued a profit warning for the year.

The company said it would take an £80m hit to its operating profit after expanding its US workforce to meet peak season demand, which fell short of expectations.

The incident led shareholders including activist hedge fund Trian Partners, owned by Nelson Peltz, to call for a shake-up at the firm.

Shareholders raised concerns about the company’s ability to integrate Terminix, a US business it bought in 2022, and called for the company’s chief financial officer and US head to step aside.

In today’s update, however, it said the Terminix integration “continues to go well”, although it will reassess performance “early in the New Year”.

While Rentokil’s CFO Stuart Ingall-Tombs did not end up stepping away, Trian’s head of research Brian Baldwin joined the board as a non-executive director this month.

Andy Ransom, chief executive of Rentokil, said: “In North America, we recognise the business has underperformed and we are focused on delivering the operational improvements required. We are expanding our initiatives to increase organic growth and we are taking action to mitigate cost overruns.

“The Terminix integration continues to progress well and we have a full programme of activity for the remainder of 2024.

“In the New Year, we will review the early results of new fourth-quarter integration activities, including the piloting of new satellite branches, and new technician and sales pay plans, in addition to assessing the effectiveness of our expanded growth initiatives.

“Post integration, we remain strongly optimistic that our business will lead a highly resilient, growing market.”