Key facts
- Rentokil shares fell 17% on Thursday morning.
- Group revenue rose 6.7% to $3.5m in the first half of the year.
- Profit before tax increased by nearly 10% to $263m.
- North America accounts for 59% of Rentokil's total revenue.
- The company cited weakening demand in North America and challenging UK trading conditions.
Rentokil shares experienced a significant decline of 17% on Thursday morning, trading down from 443.30p to 398.60p, attributed to a weakening appetite in the North American residential market. Despite this downturn, the FTSE 100 company reported a 6.7% increase in group revenue for the first six months of the year, reaching $3.5 million (£2.6 million). Profit before tax also saw a nearly 10% rise, amounting to $263 million (£196 million), driven by pricing growth that outpaced inflation and a 4.2% organic revenue increase in the second quarter.
The company, operating in 90 countries, highlighted that while 93% of its revenue comes from its top 20 markets, it is not fully leveraging its scale, particularly in North America, following its acquisition of Terminix in 2022. The North American market is crucial, representing approximately 59% of Rentokil's total revenue. Although this division's revenue grew to $995 million (£745.8 million) in the first half, the growth momentum is now decelerating.
Chief executive Mike Duffy acknowledged that the firm is "not delivering on our growth potential in many of the markets we operate in, nor adequately benefiting from our scale," specifically noting "weakness in North America" towards the end of July. In the UK, the pest control business faced "challenging trading conditions," with softness in housing demand impacting the asbestos removal business. Duffy stated the company's focus is on driving volume growth over short-term margin expansion, with a strategy to redeploy resources to accelerate organic growth, improve margins and free cash flow, ultimately creating shareholder value.