RENTOKIL INITIAL PLC (RTO)

THIRD QUARTER TRADING UPDATE

19 October 2017

Overview (CER)

Ongoing Revenue increased by 13.7% in Q3, of which 3.7% was Organic Revenue² growth (Q3 2016: 3.1%) and 10.0% was from acquisitions.  Organic growth for the quarter excludes revenue from product sales by the Group to the Haniel JV.  Organic growth including these revenues was 4.6% in the quarter.

Pest Control grew by 17.8% (5.6% Organic Revenue growth) with Growth markets delivering a 12.3% increase and Emerging markets delivering revenue growth of 65.7%, reflecting the impact of our joint venture in India.  Our Hygiene operations continued to grow steadily, with revenues increasing by 13.2%, of which 2.6% was Organic Revenue growth.  Ongoing Revenue in our Protect & Enhance markets declined by 0.2%, with an Organic Revenue decline of 1.7%, primarily due to ongoing market weakness in our UK property care business.

There have been continuing strong performances in Asia, Pacific, Latin America, and in our largest market, North America in Q3.  Europe delivered a further improvement in Ongoing Revenue growth in the quarter, with revenues in France up 2.4% year on year.

A number of operations within our North American, Latin American and Rest of the World businesses were temporarily disrupted by severe weather conditions in September.  Trading has now returned to normal in most of these markets, with the exception of Puerto Rico, which is expected to remain severely impacted for some time.    

M&A
 

​We have acquired six businesses in Q3, five in Pest Control and one in Hygiene, with combined annualised revenues of £4m in the 12 months prior to acquisition.  Including deals completed in October, we have acquired a total of 34 businesses since January 2017, of which 26​ were in Pest Control and seven in Hygiene, primarily in Emerging and Growth markets.  Combined annualised revenues of the businesses acquired totalled £1​84m in the year prior to purchase.  During the period we also completed on our transaction to divest eight laundries in France to RLD.  Our pipeline of M&A opportunities going into Q4 and 2018 remains strong. 

​Commenting on today's announcement Andy Ransom, Chief Executive, said:

"I am pleased with the ongoing progress we have made in the third quarter.  Pest Control has delivered a further improvement in revenue growth at just under 18%, while our Hygiene business has maintained momentum, increasing revenues by over 13%.  It has been a good period for M&A with six businesses acquired in Growth and Emerging markets, principally in Pest Control.  We are also very pleased to have completed our divestment of eight flat linen laundries in France to RLD.  Notwithstanding the impact of severe weather conditions on some of our businesses in the third quarter, prospects remain good for the remainder of the year across the majority of our markets, and our guidance for the full year is unchanged."        

Enquiries:

¹Ongoing Revenue represents the performance of the continuing operations of the Group (including acquisitions) after removing the effect of disposed or closed businesses.

²Organic 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 2016 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. Forward-looking statements speak only as of the date they are made and no representation or warranty, whether expressed or implied, is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Other than in accordance with the Company's legal or regulatory obligations (including under the Listing Rules and the Disclosure and Transparency Rules), the Company does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Information contained in this announcement relating to the Company or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance. Nothing in this announcement should be construed as a profit forecast.