TIDMRTO
RNS Number : 8256W
Rentokil Initial PLC
20 April 2023
20 April 2023
RENTOKIL INITIAL PLC
FIRST QUARTER TRADING UPDATE
STRONG MOMENTUM CONTINUED WITH ORGANIC GROWTH OF 6.7%
AER (1) CER
---------------------------- ----------------------------
Q1 2023 Q1 2022 Change Q1 2023 Q1 2022 Change
GBPm GBPm % GBPm GBPm %
----------- -------- -------- -------- -------- -------- --------
Revenue 1,259 722 74.4% 1,240 754 64.5%
----------- -------- -------- -------- -------- -------- --------
Trading in the year has started well, with reported Revenue up
64.5%, reflecting the benefit of M&A, including Terminix, and
strong Organic Revenue(2) growth of 6.7%. Including revenue from
COVID disinfection business, Group organic growth was 5.9%. The
performance has been underpinned by resilient demand and effective
pricing, which has continued to offset inflationary pressures.
Regional Overview
North America delivered a good performance, with Organic Revenue
growth of 4.9%. Strong momentum was sustained in Europe inc. LATAM,
the Group's second largest region (+12.0% Organic Revenue), Asia
& MENAT (+10.8% Organic Revenue) and Pacific (+7.5% Organic
Revenue). Even with the anticipated reduction in COVID related
medical waste services, the UK & Sub Saharan Africa region
recorded 4.4% Organic Revenue growth.
Category Overview
Our Pest Control business delivered Organic Revenue growth of
6.4%. North America Pest Control recorded 4.9% Organic Revenue
growth, driven by a strong start to the year of c.6.0% in pest
control services for our commercial, residential, and termite
customers. This growth was partially offset by the products
distribution business, which has seen a slower start to the season
contributed to by de-stocking across a number of major accounts and
adverse weather conditions across some of our regional markets.
Our Hygiene & Wellbeing business, supported by continued
good demand for washroom services, also performed well during the
first quarter, with Organic Revenue up 5.5% (Revenue +6.2%). France
Workwear continued its strong growth rates with Organic Revenue up
by 17.3% (Revenue +17.3%) over the period.
M&A
Delivery of the Terminix integration plan has progressed well in
the first quarter of the year and the cost synergy programme is on
track to meet full year guidance.
The Group completed 15 additional bolt-on acquisitions in the
first quarter - 12 in Pest Control and 3 in Hygiene &
Wellbeing, with combined annualised revenues in the year prior to
acquisition of c.GBP63m. This included the acquisition of RK
Environmental/Comprehensive Food Safety, a specialist in pest
management services and food safety audit consulting to the
commercial food industry operating in 31 US states. RK had
annualised revenues of c.$22m in the year prior to purchase,
ranking #44 on the Pest Control Technology 2022 Top 100 list. We
have built a substantial pipeline of high-quality opportunities and
remain confident in our targeted spend of c.GBP250m in 2023.
In March 2023, Rentokil Initial was named as one of Britain's
Most Admired Companies(3) for the quality of its products and
services.
Commenting on today's trading update, Andy Ransom, Chief
Executive, said:
"I am delighted with the performance our colleagues delivered in
Q1, which demonstrates the resilience of our compounding growth
model and continued strategy execution. This performance, combined
with further progress in our value-creating M&A programme led
by the integration of Terminix, means we are well positioned for
the remainder of the year. We reiterate our 2023 full year
expectations."
Summary of financial performance (at CER)
Regional Performance
Organic Organic
Revenue Revenue
growth growth
excluding including
Revenue disinfection disinfection
----------------------- ------------------------- -------------- --------------
Q1 Q1 Q1 Q1
2023 2022
GBPm GBPm
Change 2023 2023
% % %
----------------------- ------ ------ --------- -------------- --------------
North America 745 320 132.9% 4.9% 4.8%
Pest Control 723 298 142.6% 4.9% 4.9%
Hygiene & Wellbeing 22 22 1.0% 4.2% 1.0%
Europe (inc LATAM) 254 211 20.4% 12.0% 10.5%
Pest Control 120 90 34.2% 11.2% 11.2%
Hygiene & Wellbeing 82 77 6.2% 9.9% 5.9%
France Workwear 52 44 17.3% 17.3% 17.3%
UK & Sub Saharan
Africa 94 90 4.5% 4.4% 4.3%
Pest Control 50 45 11.0% 10.5% 10.5%
Hygiene & Wellbeing 44 45 (1.8%) (1.7%) (1.8%)
Asia & MENAT 84 77 9.5% 10.8% 4.2%
Pest Control 62 53 16.8% 11.1% 11.1%
Hygiene & Wellbeing 22 24 (7.0%) 9.5% (11.6%)
Pacific 61 54 11.9% 7.5% 7.5%
Pest Control 29 24 21.7% 12.5% 12.5%
Hygiene & Wellbeing 32 30 4.1% 3.6% 3.5%
Central 2 2 4.7% - -
Total at CER 1,240 754 64.5% 6.7% 5.9%
----------------------- ------ ------ --------- -------------- --------------
Total at AER 1,259 722 74.4%
----------------------- ------ ------ --------- -------------- --------------
Category Performance
Organic Organic
Revenue Revenue
growth growth
excluding including
Revenue disinfection disinfection
--------------------- ------------------------- -------------- --------------
Q1 Q1 Q1 Q1
2023 2022
GBPm GBPm
Change 2023 2023
% % %
--------------------- ------ ------ --------- -------------- --------------
Pest Control 984 510 93.2% 6.4% 6.4%
Hygiene & Wellbeing 202 198 1.9% 5.5% 1.1%
France Workwear 52 44 17.3% 17.3% 17.3%
Central 2 2 4.7% - -
Total at CER 1,240 754 64.5% 6.7% 5.9%
--------------------- ------ ------ --------- -------------- --------------
Total at AER 1,259 722 74.4%
--------------------- ------ ------ --------- -------------- --------------
Enquiries:
Investors / Analysts: Peter Russell, Rentokil Initial plc, + 44
7795 166506
Media: Malcolm Padley, Rentokil Initial plc, +44 7788 978199
Notes
(1) AER - actual exchange rates; CER - constant 2022 exchange
rates
(2) Organic Revenue growth represents the growth in Revenue
excluding the effect of businesses acquired during the year and,
unless stated otherwise, exclude COVID disinfection. 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 (pro forma
revenue). The Terminix acquisition is treated differently to other
acquisitions for Organic Revenue growth purposes. The full
pre-acquisition results of the Terminix business are included for
the comparative period and Organic Revenue growth is calculated as
the growth in Revenue compared to the comparative period.
(3) Britain's Most Admired Companies measures the reputation of
more than 250 of Britain's largest companies across 28 industry
sectors and it has been running since 1990. The survey is run by
Echo Research with the support from academic partners, Coventry
University.
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