Pest control giant, Rentokil, have seen a rise in their share price on Thursday morning as it said its services had been in high demand through last year’s long, hot summer. A record year of acquisitions has helped boost in finances in 2018 and the shares rose 5.4%.
Rentokil’s pre-tax profits fell 16% from the previous years to £245.5 million, however, this was down to a record 47 business acquisitions in 2018 and pre-tax profits rose 7.4% to £308 million. Rentokil’s revenue rose 2.5% to £2.47 billion in 2018 and the free cash flow was £192 million. However, net debt ballooned by £226.2 million to £1.15 billion by the end of the year.
Why it’s interesting
Rentokil has developed a reputation for acquiring small companies to bulk its business out and in 2018 it had a record year with 42 acquisitions in pest control, 4 in hygiene and 1 small Ambius business. Rentokil have said the long, warm summer in 2018 has seen an increase of reports of rodents and insects in commercial and residential premises. However, the Competition and Markets Authority (CMA) are currently investigating the proposed merger with hygiene firm Cannon. David Madden, analyst at CMC Markets, said: “The company performed well last year and it ‘made a good start’ to this financial year. The group expects to spend between £200m and £250m on mergers and acquisitions in 2019, so the firm is clearly optimistic in its outlook.”
What Rentokil said
Andy Ransom, Rentokil’s CEO said: “2018 was a very good year for Rentokil Initial and I am delighted that we have again exceeded our medium-term financial targets for revenue, profit and cash. We are confident of delivering further progress in 2019 and anticipate a slight increase in market expectations for 2019.”