Rentokil boosted by overdue recovery of City Link
Rentokil Initial, the laundry and pest control conglomerate, says its troubled courier division will turn a profit by the end of the year, while first half profits across the whole business have risen dramatically.
Rentokil Initial, the laundry and pest control conglomerate, says its troubled courier division will turn a profit by the end of the year, while first half profits across the whole business have risen dramatically.
Profits before tax in the six months to the end of June came in at £46.6m, a 75% rise over the previous year at constant exchange rates. The company says this was due to a drop in one-off costs compared to the same period of 2011 and an £11.1m reduction in amortisation costs.
Perhaps a better guide to Rentokil's performance was revenue, which rose to £1.256bn in the second half, up 2.9% on 2011, or 1.3% on a like-for-like basis.
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
Rentokil's bugbear has long been its courier service City Link, which reported revenues up 5.3% in the three months to the end of June, to £76m. The division is still losing money, £5.8m in the second quarter alone, but this is nearly 20% better than the second quarter performance of 2011 and Rentokil now says City Link will be profitable by the end of the fourth quarter.
Alan Brown, Chief Executive Officer of Rentokil Initial, said: "Organic growth has continued to progress year on year, despite challenging markets in Southern Europe and softening conditions in Northern Europe, including the UK.
"We anticipate that continued growth, coupled with further productivity improvement at City Link, will deliver year-on-year improvement in financial performance at constant exchange rates in Q3, and most notably in Q4 this year."
The market has taken him at his word, by 8:16 the stock had risen 7.2%.
BS
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
Do you qualify for the Winter Fuel Payment if you live abroad?
The Winter Fuel Payment will be means tested for expats living in Europe, in line with the new rules impacting those in the UK. But a quirk in the system means not all countries are eligible.
By Katie Williams Published
-
What the Employment Rights Bill means for your job
New workplace reforms are set to give employees new rights to benefits and flexible working
By Marc Shoffman Published