Rentokil Initial unveils rise in profits despite City Link loss

Pest control and hygiene giant Rentokil Initial revealed robust 2012 results on Friday, beating analyst expectations.

Adjusted pre-tax profits came to £191m, a 10.1% year-on-year rise, driven in part by £59m of cost savings following a restructuring of the company's textiles and hygiene arm in France and its pest control division across a number of countries.

However, its parcel delivery arm, City Link, took the spotlight away from an otherwise strong year, as it posted a $26.4m operating loss. The division has weighed on the firm since 2007 due to high operating costs and a competitive market.

Nevertheless, Rentokil's total sales grew 2.8% at constant exchange rates to £2.55bn.

The company reported particularly stellar results in the last quarter of the year with profit up 15.9% as it performed well in Asian markets including Malaysia, China and India.

During the year, Rentokil expanded its pest control operations through the acquisition of Western Exterminator and bolt-ons in North, Central and South America and the Middle East.

Chief Executive Officer Alan Brown said Rentokil finished the year on a high note as the organisation has matured over the past two years.

"While we remain mindful of continuing tough conditions across many of our markets, the operational changes we made during the year, together with the acquisition of Western Exterminator in December, give us confidence

that 2013 will see us sustain the momentum we achieved in the final quarter of 2012," he said.

The group increased its final dividend by 7.5% to 1.43p, taking the full-year total to 2.10p.

Shares rose 10.06% to 99.60p at 09:21 Friday.

RD