- Rentokil’s pre-tax profits skyrocketed by around two-thirds to £493m in 2023
- The Crawley-based company bought pest control brand Terminix for $6.7bn
Rentokil Initial shares were the top-performing FTSE 100 stock on Thursday after the pest control firm registered a bumper annual result, supercharged by its US expansion.
The Crawley-based company reported its pre-tax profits skyrocketed by around two-thirds to £493million in 2023, primarily thanks to the $6.7billion acquisition of US-based pest control brand Terminix.
Finalised in October 2022, the takeover made Rentokil the world’s largest provider of pest control services and helped its overall turnover increase by 45.8 per cent to £5.4billion last year.
Bumper result: Rentokil reported its pre-tax profits skyrocketed by around two-thirds to £493million in 2023, primarily thanks to the acquisition of pest control brand Terminix
Trade was additionally boosted by solid organic revenue growth across all business categories, with its France Workwear divisions achieving a 13.2 per cent rise and its hygiene and wellbeing operation seeing a 5.4 per cent increase.
Rentokil said sales in the latter segment were boosted by high demand from shops, offices, schools and hospitality businesses, which contributed to offset falling revenues from Covid-related disinfection services.
Meanwhile, the group benefited from an improved result in its UK property care business despite interest rate hikes causing a significant slowdown in the country’s real estate market.
Following this, Rentokil has recommended a final dividend of 5.93p per share, taking its full-year dividend to 8.68p, a 15 per cent jump on the prior year.
And its shares climbed 18.2 per cent to 506.4p by late Thursday afternoon, although their value remains slightly down on the same point 12 months ago.
Andy Ransom, Rentokil’s chief executive, said the firm ‘delivered a good operational and financial performance,’ supported by a ‘diversified, global footprint and resilient business model’.
He added: ‘We have made strong progress in the integration of Terminix to create a powerhouse business in the world’s largest pest control market.’
Rentokil now anticipates making about $325million in annual gross pre-tax synergies from amalgamating Terminix by 2026, $50million greater than previously expected.
The group completed 40 other acquisitions during 2023 and forecasts spending around another £250million on takeover deals this year.
Adam Vettese, an analyst at eToro, said: ‘It’s far from glamorous, but someone has to do it’ may well be an argument for the utility of Rentokil Initial in the eyes of investors, and in fairness, it’s not far wrong.
‘The company has acquired well, with synergies from the Terminix purchase proving to be even more fruitful than originally expected and a fair chunk of cash on the sidelines to continue expansion.’
