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RNS Number : 2249W
Rentokil Initial PLC
22 April 2021
22 April 2021
RENTOKIL INITIAL PLC (RTO)
FIRST QUARTER TRADING UPDATE
A strong first quarter, reflecting a strengthening performance
in our core Pest Control business supported by continued high
growth in Hygiene
(GBPm) Q1 2021 Growth
AER AER CER
Ongoing Revenue (1) 711.3 12.8% 15.4%
Revenue 713.6 12.5% 15.1%
Overview of performance (at CER)
We have made a good start to the year, growing Group Ongoing
Revenue by 15.4%, of which 9.4% was Organic (2) and 6.0% was from
acquisitions. Hygiene delivered a 48.5% increase in Ongoing Revenue
(up 48.1% Organic), supported by a revenue contribution of GBP75.7m
from one-time disinfection services, reducing, as anticipated, by
approximately 25% on the high watermark level of GBP100m in Q4
2020. Pest Control delivered Ongoing Revenue growth of 10.5% and
saw a return to Organic growth of 1.2% in Q1. Recovery in our core
businesses, particularly Pest Control, has demonstrated growing
momentum over the quarter, and we exited March 2021 with Group
Organic growth of 2.5% (excluding disinfection) and Organic growth
in Pest Control of 6.3%.
Regional overview (at CER)
North America delivered a very strong performance in Q1, with
Ongoing Revenue of GBP332.6m (an increase of 39.4%), with GBP263.4m
of revenue generated from Pest Control (up 20.7%) and a GBP53.6m
contribution from disinfection services. Trading conditions in our
UK & Rest of World operations, which have been severely
impacted by lockdowns throughout Q1, are expected to improve
significantly over the coming weeks, reflecting progress in the
UK's vaccination programme and subsequent easing of lockdown
restrictions, and we are therefore expecting performance for the
region to rebound strongly in Q2. Our performance in Europe was in
line with our expectations for Q1, with Germany, Southern Europe
and Latin America (managed out of Europe) in positive growth
territory throughout the quarter and with France and Benelux
returning to growth in March. The recent reintroduction of
lockdowns in parts of Europe, such as France, are likely to result
in the recovery of our European markets being several weeks behind
the recovery now anticipated in the UK and elsewhere. Our Asia and
Pacific regions have also performed as anticipated, with the
progress we have seen in Australia and New Zealand supporting our
conviction that the lifting of lockdown restrictions is likely to
be quickly followed by continued improvements in our core
businesses.
Category overview (at CER)
Our Pest Control category performed very well in Q1, reflecting
a return to Organic growth as well as the positive impact of recent
acquisitions, including Environmental Pest Service in Florida,
completed in Q4 2020. Excluding disinfection, our core Hygiene
category declined by 6.2% (down 6.6% Organic) with the pandemic
continuing to impact on regular service provision in certain
countries, particularly the UK and France. Our core Hygiene
operations delivered a significantly improved performance in March
(a decline of 3.3%) with positive momentum continuing into April,
and we expect a strong recovery in Q2 as trading conditions are
anticipated to improve across the majority of our operations.
Ongoing Revenue in our Protect & Enhance category declined by
12.3% year on year, held back by ongoing weakness in our Ambius and
France Workwear businesses.
M&A
We signed seven acquisitions in Q1 - six in Pest Control and one
in Protect & Enhance (Ambius) - in Australia, Canada, France,
Germany, Italy, Spain and Sweden, with combined annualised revenues
in the year prior to acquisition of c.GBP13m. We have built a
substantial pipeline of high-quality opportunities and remain
confident in our targeted spend of c.GBP400m in 2021.
Outlook
The ongoing COVID-19 pandemic presents obvious and continued
uncertainty. While progress has been made in controlling the virus
in certain countries, aided by vaccine roll-out programmes, other
countries are seeing rising case numbers and the reintroduction of
lockdowns. The path to normality is therefore predicted to be
uneven, reflecting regional and country variances, emergence of new
strains and vaccine hesitancy. Notwithstanding this, we continue to
expect 2021 to be a year of transition with our core services
building momentum - as demonstrated by our performance in Q1 - and
with disinfection volumes and prices reducing materially from the
start of Q2 and leading to a significant unwind as the year
progresses.
Commenting on today's announcement Andy Ransom, Chief Executive,
said:
"I am very pleased with the performance our colleagues delivered
in Q1, in particular the growth momentum achieved by our Pest
Control business, and we remain confident in delivering further
operational and financial progress in 2021."
Enquiries:
Investors Katharine Rentokil Initial
/ Analysts: Rycroft plc 07811 270734
Rentokil Initial
Media: Malcolm Padley plc 07788 978199
(1) Ongoing Revenue represents the performance of the continuing
operations of the Group (including acquisitions) after removing the
effect of disposed or closed businesses.
(2) Organic Revenue represents the growth in Ongoing Revenue
excluding the effect of businesses acquired during the year.
Acquired businesses are included in organic measures in the year
following acquisition, and the comparative period is adjusted to
include an estimated full year performance for growth
calculations.
AER - actual exchange rates; CER - constant 2020 exchange
rates
This announcement contains statements that are, or may be,
forward-looking regarding the Group's financial position and
results, business strategy, plans and objectives. Such statements
involve risk and uncertainty because they relate to future events
and circumstances and there are accordingly a number of factors
which might cause actual results and performance to differ
materially from those expressed or implied by such statements.
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and no representation or warranty, whether expressed or implied, is
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(including under the Listing Rules and the Disclosure Guidance and
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as a result of new information, future events or otherwise.
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or its share price, or the yield on its shares, should not be
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