Rentokil plots Terminax takeover evaluate amid US progress struggles

The chief executive of Rentokil has outlined plans to boost disappointing performance in the US, where the group is planning a review in the new year. 

The royal rat catcher was forced to issue a profit warning and make job cuts last month after a hiring spree ahead of peak trading season left it ‘over-resourced’ in the face of disappointing US trade.

It follows the £5.1billion takeover of Terminix last year, which turned Rentokil into the world’s largest pest group.

Rentokil became the world’s largest pest company when it bought Terminix last year 

On Thursday Rentokill revealed it had eked out North America growth of 1.4 per cent in the three months to 30 September, meaning it had ‘underperformed’, boss Andy Ransom said.

Rentokil, which saw total revenues flat year-on-year at around £1.4billion over the period, has previously told shareholders it is pursuing ‘decisive action’ to minimise excess costs.

But it has reiterated its belief in ‘the fundamental strength of the North America business’.

Ransom said on Thursday: ‘In North America, we recognise the business has underperformed and we are focused on delivering the operational improvements required.

Boss Andy Ransom said the US business had ‘underperformed’ 

‘We are expanding our initiatives to increase organic growth and we are taking action to mitigate cost overruns.’

He added that the Crawley-based Rentokil would review the progress of its ‘integration activities’ regarding the US group in the new year.

Ranson said: ‘[These include] the piloting of new satellite branches, and new technician and sales pay plans, in addition to assessing the effectiveness of our expanded growth initiatives.

‘Post integration, we remain strongly optimistic that our business will lead a highly resilient, growing market.’

This review, Rentokil added, would result in ‘2025 synergies being pushed out by approximately two to three months’.

Nevertheless, Rentokill reiterated full-year profit expectations.

Rentokil shares soared 9.3 per cent on Thursday morning to 372.7p, but have fallen almost 40 per cent over the last year. 

Rentokil’s US trade has largely suffered from subdued demand from wholesale clients like small pest control operators and landscaping businesses.

The group is plotting a greater focus on customer retention as a means of ‘unlocking’ organic growth.

Adam Vettese, market analyst at investment platform eToro, said: ‘America is still proving to be a tough nut to crack for Rentokil .

‘This is in addition to news earlier in the week that several lawsuits have been filed with allegations of securities fraud.

‘The bad news week has certainly been reflected in the share price, though some of these losses have been pared this morning as the firm reiterated guidance.’