Rampant rodents: Rats on the rise last summer boost finances at pest control giant Rentokil
Pest control giant Rentokil’s shares rose on Thursday morning as it said its services had been in high demand through last year’s long, hot summer.
The blue chip firm also announced it would replace its chairman of more than a decade, John McAdam, with senior director at Aston Martin, Richard Solomons.
Read more: CMA orders Rentokil to sell contracts to secure Cannon merger
Rentokil said a record year of acquisitions had also helped boost its finances in 2018 as it announced its full year results.
Shares rose 5.4 per cent on Thursday.
The figures
The firm’s pre-tax profits fell 16 per cent year-on-year to £245.5m, but this was down to the cost of making a record 47 business acquisitions in 2018. Adjusted pre-tax profits rose 7.4 per cent to £308m.
Revenues rose 2.5 per cent to £2.47bn, while free cash flow was £192m. However, net debt ballooned by £226.2m to £1.15bn at the end of the year.
Why it’s interesting
Rentokil has developed a reputation for buying up small companies to bulk up its business, and 2018 was a record year, with 42 acquisitions in pest control, 4 in hygiene and 1 small Ambius business.
The firm said 2018’s long summer had seen an increase in reports of insects and rats in people’s homes and workplaces, and a subsequent uptick in business for the firm.
However, directors will still be crossing their fingers the Competition and Markets Authority (CMA) drops its concerns about a proposed merger with hygiene firm Cannon, which is currently under investigation.
David Madden, analyst at CMC Markets, said: “The company performed well last year and it ‘made a good start’ to this financial year.”
“The group expects to spend between £200m and £250m on mergers and acquisitions in 2019, so the firm is clearly optimistic in its outlook.”
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What Rentokil said
Andy Ransom, CEO of Rentokil said: “2018 was a very good year for Rentokil Initial and I am delighted that we have again exceeded our medium-term financial targets for revenue, profit and cash.
"We are confident of delivering further progress in 2019 and anticipate a slight increase in market expectations for 2019.”