Rentokil shares fall after third warning on North America weakness
Shares have lost about a third in value since October 2023
Company to cut US jobs to address cost overruns
Says North America sales in July and August lower than expected
Adds CEO comment in paragraph 3, details on Terminix deal and analyst quote in paragraphs 10-12
By Yamini Kalia and Yadarisa Shabong
Sept 11 (Reuters) -Rentokil Initial RTO.L warned of lower annual profit on Wednesday after weaker than expected sales in its largest market North America, sending shares of the British pest control company as much as 20% down.
This is the third warning about weakness in its North America business in the past year.
In a conference call with analysts and investors, CEO Andy Ransom expressed disappointment in the execution of the group's strategy, launched in March, to improve revenue growth. He, however, added that he had confidence in the plan and would not change it.
The company's shares, which have lost about a third of their value since the first North America warning in October last year, were down 20% to 380 pence at 0800 GMT. The stock was the biggest loser on the FTSE 100 index .FTSE.
Rentokil, which made about 60% of its revenue in North America last year, said it would cut an undisclosed number of jobs in its U.S. workforce to address cost overruns.
Rentokil now expects full-year adjusted pretax profit to be about 700 million pounds ($916 million), versus the 766 million pounds it reported last year.
Analysts at RBC Capital Markets had expected pretax profit of about 777 million pounds.
North America sales in July and August came in lower than anticipated, organic revenue growth is now expected to grow about 1% in the second half.
The company had previously expected revenue growth to be at the lower end of a 2-4% growth range.
Rentokil, which bought U.S rival Terminixin 2021, has been struggling to integrate its business and said on Wednesday it saw a modest disruption to organic growth from the deal.
About 5.4 billion pounds have been wiped from the pest control company's market capitalisation since it issued its first profit warning in October 2023.
"The profit warning will raise further questions on management control and visibility in the region," Jefferies' analyst Allen Wells said in a note.
The company has also increased its spending on marketing in a bid to attract more customers in North America.
Activist investor Nelson Peltz's Trian Fund Management has built a stake in the company and in June said it was interested in discussing "ideas and initiatives".
Rentokil and rival Rollins account for roughly half of the U.S. pest control market, with Rentokil the larger player following the Terminix deal.
($1 = 0.7642 pounds)
Reporting by Shanima A, Yamini Kalia and Yadarisa Shabong in Bengaluru; Editing by Sherry Jacob-Phillips and Mark Potter
Actifs liés
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.
