Rentokil Initial plc (LON:RTO) has issued a Trading Update for the first three months of the 2024 financial year covering the period 1 January 2024 to 31 March 2024.
| AER1 | CER | |||||
| Q1 2024£m | Q1 2023£m | Change% | Q1 2024£m | Q1 2023£m | Change% | |
| Revenue | 1,270 | 1,259 | 0.9% | 1,294 | 1,233 | 4.9% |
Unless otherwise stated, figures related to the first quarter and are stated at constant exchange rates.
Andy Ransom, Chief Executive of Rentokil Initial plc, said:
“We have made a positive overall start to 2024. The Group has performed well and our RIGHT WAY 2 plan has delivered a stabilising performance in North America. With the key trading period for the business ahead of us, we remain confident in delivering on our guidance of 2-4% Organic Revenue growth in the region.
“As the year proceeds, we look forward to continued progress, driven by our focus on North America growth and the Terminix integration plan, which is in the advanced stages of preparation for the first full branch integrations commencing mid-year.”
· Group Revenue up 4.9%, of which 3.1% was Organic Revenue growth. Continued pricing momentum.
· North America growth performance has stabilised with Organic Revenue up 1.5%. Early initiatives of RIGHT WAY 2 growth plan underway.
– Organic Revenue in Pest Control overall up 1.5% and Pest Control services for commercial, residential and termite customers up 1.0%.
– Inbound digital lead flow performance was similar to Q4, with an improvement in lead quality, which had a positive impact on our sales conversion and return on marketing spend. We are encouraged by increased lead flows in the first two weeks of April.
– Technician sales leads participation rates improved by 8ppts from February to March.
– Customer retention was stable at 79.5%, and our pricing activities were successful in passing cost inflation to our customers.
– North America colleague retention increased further to 76.7% (31 December 2023: 75.2%), with the largest improvement in sales colleague roles (up 2.7ppts to 69.1%). We launched a new compensation plan for our new Terminix sales colleagues to support the continued improvement in sales colleague retention.
– New ‘Terminix It’ multi-channel advertising and marketing campaign launched in late Q1 to build brand awareness and preference with key customer segments, and set to ramp up in the peak season.
· Good momentum in Organic Revenue growth was sustained in all other regions: +6.2% in Europe inc. LATAM, the Group’s second largest region; +4.1% in UK & Sub Saharan Africa; +4.3% in Asia & MENAT; and +7.3% in Pacific.
· Organic Revenue growth across all categories: Pest Control up 2.7%, Hygiene & Wellbeing up 3.8%, and France Workwear up 7.7%.
· Terminix integration plan saw further progress towards full branch integration starting mid-year.
– Completion of the merger of the Rentokil and Terminix legal entities into Rentokil North America, Inc. with all employees, customers and suppliers now contracted to the same legal entity. The legal combination is a critical enabler of future integration activities, which will allow for shared use of resources and the harmonisation of operating standards and pay plans.
– Go live of the new combined general ledger and internal reporting systems, facilitating integrated performance management, and continued progress on the development of the operational technology stack.
· The Group’s bolt-on M&A programme continued to create value with 8 deals, delivering annualised revenue in the year before acquisition of £45m. This includes the acquisition of HiCare Services Private Limited, the second largest pest control company in India. We remain confident in our targeted spend of c.£250m in 2024.
· The Group is on track to deliver on expectations for FY 2024, including 2-4% Organic Revenue growth in North America, accompanied by modest margin progression, which we continue to expect to be weighted towards H2.
Summary of financial performance (at CER)
Regional Performance
| Revenue | Organic Revenue growth | |||
| Q1 2024 £m | Q1 2023 £m | Change% | Q12024% | |
| North America | 761 | 743 | 2.3 | 1.5 |
| Pest Control | 739 | 721 | 2.4 | 1.5 |
| Hygiene & Wellbeing | 22 | 22 | 0.8 | 0.6 |
| Europe (inc LATAM) | 274 | 256 | 7.4 | 6.2 |
| Pest Control | 130 | 120 | 8.6 | 6.5 |
| Hygiene & Wellbeing | 87 | 83 | 5.5 | 4.7 |
| France Workwear | 57 | 53 | 7.7 | 7.7 |
| UK & Sub Saharan Africa | 103 | 92 | 12.3 | 4.1 |
| Pest Control | 50 | 48 | 4.1 | 4.1 |
| Hygiene & Wellbeing | 53 | 44 | 21.2 | 4.1 |
| Asia & MENAT | 86 | 81 | 5.7 | 4.3 |
| Pest Control | 63 | 59 | 6.7 | 5.4 |
| Hygiene & Wellbeing | 23 | 22 | 3.2 | 1.4 |
| Pacific | 67 | 58 | 14.4 | 7.3 |
| Pest Control | 34 | 28 | 20.1 | 9.9 |
| Hygiene & Wellbeing | 33 | 30 | 9.1 | 5.0 |
| Central | 3 | 3 | (0.3) | (0.3) |
| Total at CER | 1,294 | 1,233 | 4.9 | 3.1 |
| Total at AER | 1,270 | 1,259 | 0.9 | |
Category Performance
| Revenue | Organic Revenue growth | |||
| Q1 2024 £m | Q1 2023 £m | Change% | Q12024% | |
| Pest Control | 1,016 | 976 | 4.0 | 2.7 |
| Hygiene & Wellbeing | 218 | 201 | 8.7 | 3.8 |
| France Workwear | 57 | 53 | 7.7 | 7.7 |
| Central | 3 | 3 | (0.3) | (0.3) |
| Total at CER | 1,294 | 1,233 | 4.9 | 3.1 |
| Total at AER | 1,270 | 1,259 | 0.9 | |
The Company will host a webcast and teleconference at 9:30 a.m. BST to discuss the results. The audio webcast and accompanying presentation materials will be accessible via the IR section of the Company’s website (www.rentokil-initial.com/investors). To ask questions, please join via the teleconference with conference ID 1097846 on one of the dial-in options below, with additional international access numbers found at https://registrations.events/directory/international/itfs.html. A replay will be available on the Company website after the call.
UK: +44 20 3481 4247
USA: +1 (646) 307 1963
Rentokil Initial intends to publish its 2024 Interim Results on 25 July 2024.
