Q3 Trading Update

21 October 2021

RENTOKIL INITIAL PLC (RTO) - THIRD QUARTER TRADING UPDATE

Strong momentum across our core businesses in Q3, continued good execution of M&A

Overview of Q3 performance (at CER)

Q3 saw continued strong momentum in our core businesses with Group Ongoing Revenue, excluding disinfection services, growing by 14.5%, of which 6.7% was Organic² and 7.8% was from acquisitions. 

Pest Control delivered an excellent performance overall during the period. Despite our Australian, New Zealand, Malaysian and Indonesian operations being materially impacted by lockdowns in Q3, the category grew Ongoing Revenues by 18.3%, of which 7.5% was Organic.  Ongoing Revenue in our Growth and Emerging markets grew by 18.7% and 15.6% respectively.  In our North America business, a higher number of colleagues either off work with COVID-19 or self-isolating contributed to some labour shortages in the quarter.  Despite this, our Pest Control business in North America continued to demonstrate very strong momentum, growing revenues by 24.6%, 10.1% Organic.      

Our Core Hygiene business, excluding disinfection, delivered a 6.4% increase in Ongoing Revenue (4.7% Organic), reflecting good performances in the UK, Europe and Latin America but held back, as with Pest Control, by significant challenges associated with lockdowns and movement restrictions in Australia, New Zealand, Indonesia and Malaysia.   

Sales from disinfection services have tapered in line with our expectations at £11.4m (Q1: £75.7m, Q2: £22.6m), a decline of £62.1m on this time last year.  We are maintaining our guidance for disinfection revenues in H2 to be within the range of £10m to £20m. 

Ongoing Revenue in our Protect & Enhance category grew by 6.2% (5.5% Organic), reflecting further recovery in our France Workwear, Ambius, UK Property Care and Dental Hygiene services businesses. 

New category structure - Hygiene & Wellbeing

At our Capital Markets Day on 28 September, we announced that in response to the increasing importance of hygiene and wellbeing services, we are expanding our Hygiene category with effect from 1 January 2022.  The enlarged category, called Hygiene & Wellbeing, will comprise our current Hygiene operations together with our Ambius, Dental Hygiene and Cleanroom services operations, previously part of our Protect & Enhance category.  Adopting the new category structure in Q3 would give organic growth in Hygiene & Wellbeing of 6.6%.    

M&A

​We completed nine acquisitions in Q3: seven in Pest Control; one in Hygiene; and the previously announced transaction with Boecker, which completed on 3 August and which offers both Pest Control and Hygiene services.  As a result, we have acquired businesses with operations in Australia, Chile, Colombia, Guadeloupe, Lebanon, Saudi Arabia, United Arab Emirates and the US, as well as interests in affiliated businesses in Kuwait, Qatar and Nigeria. Together, these have combined annualised revenues in the year prior to acquisition of c.£48m.  Q2's excellent momentum has been maintained in Q3 and also into Q4, and our anticipated full year expenditure on M&A remains in the region of at least £450m to £500m, as previously guided.    

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

"We have delivered a strong performance from our core businesses in the quarter and are confident of sustaining this momentum for the remainder of the year. Assuming no further significant deterioration in trading conditions arising from the pandemic, our performance in Q3 - combined with further progress in our value-creating M&A programme - means we remain on track to deliver a full year performance in line with the guidance given at our interim results in July."  

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 2020 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 Guidance 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.