Pest control and hygiene giant Rentokil Initial reported weaker first quarter pre-tax profit and confirmed that it has sold its City Link business to focus on its pest, hygiene and workwear businesses.
The group reported an 11.7% decline in pre-tax profit to £9.8m during the quarter ended March 31st compared to the same period a year earlier. Revenue, at constant exchange rates, increased to £633.1m from £616.4m.
Chief Executive Officer Alan Brown said: "We have experienced mixed trading conditions during Q1. The early adopters of the integrated country operating model - Asia, the UK, the US & the Nordics - have all performed well, supported in North America by an encouraging start from our 2012 acquisitions. City Link has also improved in line with Q4 2012 performance."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
He added: "Continental Europe has become more challenging, with strong pricing pressure particularly in flat linen. Restructuring is progressing in Rentokil Initial's three major workwear markets of France, Benelux and Germany. This, coupled with a strong innovation programme in H2 2013, will deliver material benefits progressively through 2013 and into 2014, which should more than offset current market pressures."
The group's City Link business was sold to Better Capital for £1, who will invest £40m to support the business, it explained.
"The combination of these initiatives, coupled with substantial acquisition benefit in Q2 and Q3, enables us to retain our previous guidance for the year, despite tough trading conditions in Continental Europe," Rentokil said.
CJ
