REG - Rentokil Initial PLC - Q1 Trading Update

Rentokil InitialAnnouncement

17/04/2025 07:00

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RNS Number : 3611F  Rentokil Initial PLC  17 April 2025

17 April 2025

RENTOKIL INITIAL PLC

FIRST QUARTER TRADING UPDATE

Rentokil Initial plc (the "Company") today issues a Trading Update for the
first three months of the 2025 financial year covering the period from 1
January to 31 March 2025. As previously announced, Rentokil Initial now
reports in US dollars to better reflect the geographic mix of its revenue and
earnings.

Andy Ransom, Chief Executive of Rentokil Initial plc, said:

"Our International Pest Control business performed well. As already stated,
North America had a slow first quarter with continued subdued lead flow. Our
focus remains on building growth momentum and positioning the business to
deliver on our strategic ambitions. Despite increased macro-economic
uncertainties, we remain confident about the longer-term based on the
resilience of our markets, our global reach, our diverse customer base and our
recurring revenues."

Q1 2025

The Group reported total Revenue of $1,635m in Q1 2025 (AER), representing
year-on-year growth of 1.5% and Organic Revenue growth of 1.8%¹, held back by
c.30bps due to one fewer trading day year-on-year.

North America

●    Revenue growth in North America was 0.5% and Organic Revenue growth
was 0.7%, with a c.50bps headwind from one fewer trading day.

●    Pest Control Organic Revenue was up 0.5% and Pest Control services
for residential, commercial and termite customers was down by 0.2% as it
continued to be impacted by low inbound lead flow and contract sales.

●   North America colleague retention increased to 79.8% (FY 24: 79.4%)
and customer retention increased to 80.4% (FY 24: 80.1%), supported by our
enhanced retention strategies. These favourable trends are positive for future
organic growth prospects.

Growth Initiatives

●    Digital inbound lead flow from our paid search activities returned
to positive growth in March, following a decline in February as we
transitioned to a new agency partner. While lead generation from our organic
search initiatives remained subdued, we expect a positive shift supported by
the rollout and full activation of the new satellite branches and brand
strategy. 36 satellite branches across the region are now operational.

●    Sales lead participation rates among technicians (The Trusted
Advisor plan) improved by 9ppts in the quarter to 60%.

●    Five-star reviews for Terminix, which serve as a critical component
of Internet search visibility, increased by 71% in the quarter.

●     The door-to-door sales pilot programme is set to launch in early
Q2 with the participation of c.30 branches.

International (Group excluding North America)

Organic Revenue grew 3.3%, with good performances in Europe (incl. LATAM),
Asia & MENAT and Pacific, offset by the UK, which lapped strong prior year
comparatives in its specialist hygiene asbestos remediation business.

Category Performance

Pest Control Organic Revenue growth was 1.7% led by international, up by 4.7%.
Hygiene & Wellbeing grew by 1.6%, with a drag from the UK. France Workwear
was up 4.4%.

M&A

The Group's bolt-on M&A programme continued to create value with 6 deals,
delivering annualised revenue in the year before acquisition of $13m.

Rentokil Initial intends to publish its 2025 Interim Results on 31 July
2025.

Notes

¹ Organic Revenue growth is at CER. The revenue base used for North America
Organic Revenue growth percentage also deducts revenue from 1 January 2024 to
31 March 2024 for the Paragon distribution business, closed with effect from 1
April 2024.

 

Summary of Financial Performance

                              AER                       CER
                              Q1 2025  Q1 2024  Change  Organic Revenue Growth

%
                              $m       $m

                                                %
 North America
 Pest Control                 921      918      0.2%    0.5%
 Hygiene & Wellbeing          30       28       9.3%    5.9%
                              951      946      0.5%    0.7%

 International
 Pest Control                 358      345      3.5%    4.7%
 Hygiene & Wellbeing          251      245      2.7%    1.1%
 France Workwear              71       71       0.6%    4.4%
                              680      661      2.9%    3.3%

 Europe (incl. LATAM)
 Pest Control                 164      163      0.4%    3.8%
 Hygiene & Wellbeing          111      109      2.3%    2.3%
 France Workwear              71       71       0.6%    4.4%
                              346      343      1.0%    3.5%

 UK & Sub Saharan Africa
 Pest Control                 65       62       4.1%    4.7%
 Hygiene & Wellbeing          73       67       8.5%    (1.2%)
                              138      129      6.4%    1.6%

 Asia & MENAT
 Pest Control                 85       78       8.5%    5.7%
 Hygiene & Wellbeing          29       28       3.4%    3.3%
                              114      106      7.2%    5.1%

 Pacific
 Pest Control                 44       42       4.9%    6.1%
 Hygiene & Wellbeing          38       41       (6.2%)  0.3%
                              82       83       (0.6%)  3.3%

 Central                      4        4        -       0.6%
 Total                        1,635    1,611    1.5%    1.8%

 

 

Category Performance

                          AER                       CER
                          Q1 2025  Q1 2024  Change  Organic Revenue Growth

%
                          $m       $m

                                            %
 Pest Control             1,279    1,263    1.1%    1.7%
 Hygiene & Wellbeing      281      273      3.4%    1.6%
 France Workwear          71       71       0.6%    4.4%
 Central                  4        4        -       0.6%
 Total                    1,635    1,611    1.5%    1.8%

Today, 17 April at 9:00am BST, Rentokil Initial Chief Executive, Andy Ransom
and Chief Financial Officer, Paul Edgecliffe-Johnson will host a conference
call for analysts and investors. A replay will be available on the Company
website following the event.

To join via teleconference, please register in advance using the link below:

https://registrations.events/direct/Q4I3868179
(https://registrations.events/direct/Q4I3868179)

Alternatively, the live audio webcast can be accessed at:

https://events.q4inc.com/attendee/543985772
(https://events.q4inc.com/attendee/543985772)

Enquiries:

Investors / Analysts: Peter Russell, Rentokil Initial plc, + 44 7795 166506

Media: Malcolm Padley, Rentokil Initial plc, +44 7788 978199

 

Cautionary statement

In order to utilise the 'safe harbour' provisions of the U.S. Private
Securities Litigation Reform Act of 1995 (the "PSLRA") and the general
doctrine of cautionary statements, Rentokil Initial plc ("the Company") is
providing the following cautionary statement: This communication contains
forward-looking statements within the meaning of the PSLRA. Forward-looking
statements can sometimes, but not always, be identified by the use of forward-
looking terms such as "believes," "expects," "may," "will," "shall," "should,"
"would," "could," "potential," "seeks," "aims," "projects," "predicts," "is
optimistic," "intends," "plans," "estimates," "targets," "anticipates,"
"continues" or other comparable terms or negatives of these terms and include
statements regarding Rentokil Initial's intentions, beliefs or current
expectations concerning, amongst other things, the results of operations of
the Company and its consolidated entities ("Rentokil Initial" or "the Group"),
financial condition, liquidity, prospects, growth, strategies and the economic
and business circumstances occurring from time to time in the countries and
markets in which Rentokil Initial operates. Forward- looking statements are
based upon current plans, estimates and expectations that are subject to
risks, uncertainties and assumptions. Should one or more of these risks or
uncertainties materialise, or should underlying assumptions prove incorrect,
actual results may vary materially from those indicated or anticipated by such
forward-looking statements. The Company can give no assurance that such plans,
estimates or expectations will be achieved and therefore, actual results may
differ materially from any plans, estimates or expectations in such
forward-looking statements. Important factors that could cause actual results
to differ materially from such plans, estimates or expectations include: the
Group's ability to integrate acquisitions successfully, or any unexpected
costs or liabilities from the Group's disposals; difficulties in integrating,
streamlining and optimising our IT systems, processes and technologies,
including artificial intelligence technologies; the Group's ability to
attract, retain and develop key personnel to lead the business; the
availability of a suitably skilled and qualified labour force to maintain the
Group's business; cyber security breaches, attacks and other similar
incidents, as well as disruptions or failures in the Group's IT systems or
data security procedures and those of our third-party service providers;
weakening general economic conditions, including changes in the global job
market or decreased consumer confidence or spending levels, especially as they
may affect demand from the Group's customers; inflationary pressures, such as
increases in wages, fuel prices and other operating costs; the Group's ability
to implement its business strategies successfully, including achieving its
growth objectives; the Group's ability to retain existing customers and
attract new customers; the highly competitive nature of the Group's
industries; extraordinary events that impact the Group's ability to service
customers without interruption, including a loss of its third-party
distributors; the impact of environmental, social and governance ("ESG")
matters, including those related to climate change and sustainability, on the
Group's business, reputation, results of operations, financial condition
and/or prospects; supply chain issues, which may result in product shortages
or other disruptions to the Group's business; the Group's ability to protect
its intellectual property and other proprietary rights that are material to
the Group's business; the Group's reliance on third parties, including
third-party vendors for business process outsourcing initiatives, investment
counterparties, and franchisees, and the risk of any termination or disruption
of such relationships or counterparty default or litigation; any future
impairment charges, asset revaluations or downgrades; failure to comply with
the many laws and governmental regulations to which we are subject or the
implementation of any new or revised laws or regulations that alter the
environment in which we do business, as well as the costs to us of complying
with any such changes and the risk of related litigation; termite damage
claims and lawsuits related thereto and any associated impacts on the termite
provision; the Group's ability to comply with safety, health and environmental
policies, laws and regulations, including laws pertaining to the use of
pesticides; any actual or perceived failure to comply with stringent, complex
and evolving laws, rules, regulations and standards in many jurisdictions, as
well as contractual obligations, including data privacy and security, and any
litigation related to such actual or perceived failures; the identification of
material weaknesses in the Group's internal control over financial reporting
within the meaning of Section 404 of the Sarbanes-Oxley Act; changes in tax
laws and any unanticipated tax liabilities; adverse credit and financial
market events and conditions, which could, among other things, impede access
to or increase the cost of financing; the restrictions and limitations within
the agreements and instruments governing our indebtedness; a lowering or
withdrawal of the ratings, outlook or watch assigned to the Group's debt
securities by rating agencies; an increase in interest rates and the resulting
increase in the cost of servicing the Group's debt; and exchange rate
fluctuations and the impact on the Group's results or the foreign currency
value of the Company's ADSs and any dividends. The list of factors presented
here is representative and should not be considered to be a complete statement
of all potential risks and uncertainties. Unlisted factors may present
significant additional obstacles to the realisation of forward-looking
statements. The Company cautions you not to place undue reliance on any of
these forward-looking statements as they are not guarantees of future
performance or outcomes and that actual performance and outcomes, including,
without limitation, the Group's actual results of operations, financial
condition and liquidity, and the development of new markets or market segments
in which the Group operates, may differ materially from those made in or
suggested by the forward-looking statements contained in this communication.
Except as required by law, Rentokil Initial assumes no obligation to update or
revise the information contained herein, which speaks only as of the date
hereof.

Additional information concerning these and other factors can be found in
Rentokil Initial's filings with the U.S. Securities and Exchange Commission
("SEC"), which may be obtained free of charge at the SEC's website, http://
www.sec.gov, and Rentokil Initial's Annual Reports, which may be obtained free
of charge from the Rentokil Initial website, https://www.rentokil-initial.com

No statement in this announcement is intended to be a profit forecast and no
statement in this announcement should be interpreted to mean that earnings per
share of Rentokil Initial for the current or future financial years would
necessarily match or exceed the historical published earnings per share of
Rentokil Initial.

This communication presents certain non-IFRS measures, which should not be
viewed in isolation as alternatives to the equivalent IFRS measure, rather
they should be viewed as complements to, and read in conjunction with, the
equivalent IFRS measure. These include revenue and measures presented at
actual exchange rates ("AER" - IFRS). Non-IFRS measures presented also include
Organic Revenue Growth. The Group's internal strategic planning process is
also based on these measures, and they are used for incentive purposes. These
measures may not be calculated in the same way as similarly named measures
reported by other companies.

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