- Benefits from Terminix merger
- Pre-tax profit of £532 million for 2022
- Dividend hike of 18% to 7.55p per share
Hygiene and pest control firm Rentokil Initial (RTO) reported a 27.7% rise in adjusted pre-tax profit to £532 million compared with £461 million for the full year lifted by the successful integration of Terminix and other M&A activity throughout 2022.
The shares responded positively to the news rising nearly 7% to 534.49p in early trading.
There was further good new for investors as the firm increased its dividend by 18.2% from 5.15p per share for 2022 to 7.55p per share.
Ongoing revenues for the group rose 25.6% to £3.71 billion at actual exchange rates, however Covid disinfection revenue reduced to £20 million, with £6 million in the second half of 2022.
Andy Ransom, CEO of Rentokil Initial said: ‘Our strong financial results, with organic revenue growth of 6.6%, demonstrate the resilience of our business model. We continue to successfully manage cost inflation, while driving investment in our services and people to sustain high levels of customer and colleague retention.
‘All of this has been achieved alongside the landmark acquisition of Terminix, reinforcing Rentokil Initial as the largest pest control company in the world. Early progress on integration has been excellent.
‘I am especially pleased with today's announcement of an increase in expectations for total cost synergies to at least $200m that evidences our strong conviction in the enlarged group's financial and strategic opportunities going forward.’
Last year, the firm continued with a ‘strong’ M&A (mergers and acquisition) strategy resulting in 52 acquisitions - excluding Terminix - for an aggregate consideration of £259 million. For 2023, Rentokil has targeted full year spending of £250 million.
POSITIVE OUTLOOK
Rentokil Initial remain positive for 2023 due to its ‘inherently resilient business model’ and has raised its medium-term guidance for organic revenue growth from 4-5% to ‘at least’ 5%.
In the full year 2025, the firm expects to deliver a group adjusted operating margin of greater than 19%.
The firm said throughout 2023, it will continue to benefit from the Terminix integration with cost synergy guidance increased from at least $150 million to at least $200 million by the end of 2025.
