Pest control group Rentokil lifts savings guidance, citing Terminix deal benefits
Rentokil Initial PLC (LON:RTO) reported full-year income that came in above analysts’ expectations and raised its cost savings guidance, thanks to its blockbuster merger with rival Terminix.
The U.K.-based business posted a 28% jump in annual adjusted pretax profit compared to the prior year to £532 million, beating Bloomberg consensus estimates of £514.8M, as price increases helped offset an inflation-linked uptick in input expenses.
The FTSE 100-listed company also bumped up its expectations for medium-term organic revenue growth to at least 5% from a range of 4% to 5%, citing benefits from the $6.7 billion acqusition of U.S. extermination specialist Terminix in 2021.
Anticipated cost synergies in 2023 stemming from the deal were also lifted to $200M, up from the prior outlook of $150M, which Rentokil said reflected “excellent progress” in the integration of Terminix into its operations.
Analysts at Citi said the results and the “confident” outlook were all positives for Rentokil.
Shares rallied by as much as 8.7% in early trading on Thursday, touching their highest mark since April 2020.