On Thursday, pest control provider, Rentokil noted continued momentum in its Q1 2022 results with revenues reaching £721m.
Rentokil generated an ongoing revenue of £721m in Q1 of 2022, seeing a 1.8% CER growth.
Rentokil’s Pest Control segment reported organic growth of 5.5% in the first quarter of 2022, with all regions showing positive growth.
In Rentokil’s Growth and Emerging markets, ongoing revenue increased by 10.9% and 13.6%, respectively.
North America Pest Management, is Rentokil’s largest pest control company and has continued to grow at a healthy pace. The company [North America Pest Management] is increasing organic revenue by over 5% as it is driven by increased revenue from both residential and commercial customers.
Despite the ongoing impact of the pandemic in a number of countries, Hygiene & Wellbeing expanded organically by 12.9% which indicated growth in all areas, including Asia for Rentokil.
Trading conditions in Rentokil’s France Workwear division improved further in Q1 2022, resulting in 14.7% organic growth.
Rentokil’s group ongoing revenue increased by 12.3%, excluding disinfection, with 8.0% organic growth and 4.3% through acquisitions. The group’s organic growth was -2.0% including disinfection.
Rentokil expects robust disinfection revenues of £95.3m in H1 2022, as the group disclosed in its preliminary findings in March.
In the first quarter of 2022, disinfection revenues totalled £8.2m which decreased by £64.5m compared to 2021 for the company.
Rentokil forecasts its disinfection revenues to be in the range of £10m to £20m for the full year of 2022, compared to £116m last year.
In Q1, Rentokil faced inflationary increases in its cost base, such as labour, fuel, consumables, and paper. The group has continued to successfully minimise the impact of these on margins by annual price increases (APIs).
In the first quarter, total price increases completely offset input cost inflation, and Rentokil remained confident that it will be able to continue to use APIs to combat rising pricing throughout the year.
The group’s customer retention was strong in the first quarter, at 85.3%, which was consistent with the full year of 2021.
Colleague retention on a rolling 12-month basis was similar, with service colleague retention at 81.8%, equivalent to the full year of 2021, and sales colleague retention at 83.5% which increased marginally from 2021 for Rentokil.
In Q1, Rentokil acquired 11 firms in Chile, Colombia, Hong Kong, Poland, Malaysia, New Zealand, and the United States, with total annualised revenues of £20m in the year before the purchases.
The company said it will continue to build on the strength of its M&A pipeline in both Pest Control and Hygiene & Wellbeing. Rentokil remainS confident in its target expenditure of roughly £250m for 2022 on M&A.
Rentokil said the appropriate waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired on March 15, completing the antitrust proceedings in the United States.
Rentokil added that obtaining shareholder approval from the company and Terminix, as well as the registration of the company ADSs with the US SEC and their listing on the NYSE, are all prerequisites that must be met.
Both parties are on track to complete the transaction in the second half of 2022, with a target completion date at the end of the third quarter which is owed to solid work on the remaining requirements.
As a consequence of organic growth and revenue flow through from our M&A programme in 2021, the business is operating well and in line with our expectations.
Despite record disinfection revenues in H1 and persistent macroeconomic uncertainties, Rentokil continues to expect the group to make good operational and financial improvements in the second half of 2022.
Rentokil shares lifted 2.7% to 529p on announcing a robust Q1 trading update.
Rentokil has no activities or exposure in Russia or Ukraine, and has been unaffected by the conflict there.
During the quarter, Rentokil donated £100,000 to UNICEF from the Rentokil Initial Cares charity fund, which is assisting children and families displaced across Ukraine and neighbouring countries with crucial services including as water and sanitation, vaccination, and healthcare.
