Rentokil Initial PLC 6-K, filed Oct 19, 2023
Rentokil Initial PLC (RTO)
6-K
2023-10-19
For: 2023-10-19
View Original
Added on
April 11, 2026
About this 6-K
Rentokil Initial PLC filed this 6-K on October 19, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of October 2023
Commission File Number: 001-41524
Rentokil Initial plc
(Registrant’s name)
Compass House
Manor Royal
Crawley
West Sussex RH10 9PY
United Kingdom
(Address of principal executive office)
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form
40-F ☐
Indicate by check mark if the registrant is
submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(1): ☐
Indicate by check mark if the registrant is
submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(7): ☐
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Q3
Trading Update dated 19 October 2023
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19 October 2023
RENTOKIL INITIAL PLC - THIRD QUARTER TRADING UPDATE
Continued good progress on Group strategy and the integration of
Terminix;
Softer consumer demand environment in North America, with
broad-based strength elsewhere
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AER1
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CER
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||||
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Q3 2023
£m
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Q3 2022
£m
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Change
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Q3 2023
£m
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Q3 2022
£m
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Change
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Revenue
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1,382
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901
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53.3%
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1,404
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878
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59.9%
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Unless otherwise stated, financials relate to Q3 2023 and are
stated at constant exchange rates.
The Group delivered a good overall performance in the third
quarter. Revenue growth of 59.9% reflected the benefit of M&A
including Terminix and Organic Revenue2 growth
of 4.3%. We continued to successfully execute on our pricing
strategy to recover input cost inflation.
Regional Overview
In North America, Organic Revenue increased by 2.2%. Pest Control
recorded organic growth of 2.3% with the US products wholesale
distribution business down 2.5% in the quarter, reflecting lower
demand for chemical products for use in pest control and in turf
and ornamental end markets. North America Pest Control services
for commercial, residential and termite customers delivered organic
growth of 2.7%. While customer retention rates remained resilient,
new residential customer acquisition was challenged by the
macroeconomic backdrop and a softer consumer demand environment.
This was reflected in the continuation of late Q2 trends in pest
control digital search volumes experienced that reduced lead flow.
In the third quarter, our Employer of Choice programme
has delivered further
improvement in North America colleague retention, led by technician
roles.
In other regions, which combine both growth and emerging markets,
the Group has driven a sustained strong performance, benefiting
from its excellent customer relationships, service quality and
attractive structural growth drivers, leading to Organic Revenue
growth of:
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9.5% in Europe (inc. Latin America), the Group's second largest
region;
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8.9% in Asia & MENAT;
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7.6% in Pacific; and
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5.2% in the UK and Sub-Saharan Africa, which despite persistent
macro headwinds strengthened on its H1 performance
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Business Category Overview
At the business category level, Pest Control delivered a 3.8%
increase in Organic Revenue (Revenue +81.2%), with relative
softness in North America offset by broad-based strength elsewhere.
Our Hygiene & Wellbeing business, supported by continued good
demand for washroom services, sustained its momentum in the third
quarter, with Organic Revenue up 5.7% (Revenue +7.0%). France
Workwear also enjoyed another strong period with Organic Revenue up
by 12.2% (Revenue +12.2%).
Terminix Integration and M&A
Delivery of the Terminix integration plan has progressed well in
the third quarter and the cost synergy programme is on track to
meet full year guidance of $60m of pre-tax net P&L synergies.
In the period we completed several important initiatives, including
moving all of our 22,000 US colleagues onto the same Human Capital
Management and payroll system. We remain confident in the
significant benefits of the combination with Terminix and are on
course with our integration plans.
The Group has completed 31 bolt-on acquisitions in the nine months
to the end of September with annualised revenues of c.£86m. In
the third quarter we completed 7 deals - 6 in Pest Control and 1 in
Hygiene & Wellbeing, with annualised revenues of c.£7m.
This includes highly targeted acquisitions to support expansion in
growth 'Cities of the Future', including those in Indonesia, China
and Brazil. We continue to execute on a substantial pipeline of
additional, high-quality opportunities.
Outlook
The Terminix integration programme continues apace and we remain
firmly on course to deliver our full year pre-tax net cost synergy
guidance of $60m year over year. In North America, we remain
mindful of the macroeconomic backdrop. Near-term market uncertainty
means that the region's full year performance is anticipated to be
marginally below our previous expectations. Reflecting the impact
on revenue, we now anticipate regional Adjusted Operating Margin to
be in the range of 18.5%-19.0%.
Overall, we expect to achieve good growth in the Group in the
remainder of 2023. We continue to believe that the benefit of our
diversified portfolio and strong H1 performance will enable us to
deliver Group results broadly in line with current expectations.
Our sustained focus on managing inflationary pressures means we
remain on track to meet our full year guidance to grow Group
Adjusted Operating Margin to c.16.5%. This includes a H2 margin
performance in Hygiene & Wellbeing in excess of 19.0%, as set
out at the Interim announcement.
The Group remains strongly cash generative, supporting its
effective reduction in debt. We reiterate previous guidance to
achieve c.3x net debt to EBITDA by the end of the
year.
Commenting on today's trading update, Andy Ransom, Chief Executive,
said:
"The Group delivered a good overall performance in the third
quarter. We have a proven, effective strategy to deliver organic
growth, focused on strong customer relationships and service
quality. In addition, the portfolio effect of our global business
operating in multiple markets enables us to weather regional
headwinds. The strong fundamentals of our operations are further
enhanced by our value-creating M&A programme, led by the
integration of Terminix. We are making good progress on the
transformation journey and remain confident about the significant
value-enhancing benefits."
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Enquiries
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Investors / Analysts:
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Peter Russell, Rentokil Initial plc
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+44 7795 166506
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Media:
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Malcolm Padley, Rentokil Initial plc
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+44 7788 978199
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Notes
1AER -
actual exchange rates; CER - constant 2022 exchange
rates.
2 Organic
Revenue growth represents the growth in Revenue excluding the
effect of businesses acquired during the year and, unless stated
otherwise, excludes COVID disinfection. Acquired businesses are
included in organic measures in the year following acquisition, and
the comparative period is adjusted to include an estimated full
year performance for growth calculations (pro forma revenue). The
Terminix acquisition is treated differently to other acquisitions
for Organic Revenue growth purposes. The full pre-acquisition
results of the Terminix business are included for the comparative
period and Organic Revenue growth is calculated as the growth in
Revenue compared to the comparative period. This differing
treatment for Terminix will expire at the end of 2023 when we will
have full year Terminix comparatives. Organic growth has no
equivalent GAAP measure and is presented to help understand the
element of revenue growth that does not relate to acquisition
activity.
This statement presents certain further non-GAAP measures, which
should not be viewed in isolation as alternatives to the equivalent
IFRS measure, rather they should be viewed as complements to, and
read in conjunction with, the equivalent IFRS measure. These
include revenue and profit measures presented at actual exchange
rates ("AER" - GAAP) and constant full year 2022 exchange rates
("CER" - Non-GAAP). Non-GAAP measures include Adjusted Operating
Profit, Adjusted Profit Before Tax, Adjusted Profit After Tax,
Adjusted EBITDA, Adjusted Interest, Free Cash Flow, Adjusted Free
Cash Flow, Adjusted Cash Flow (previously named Operating Cash
Flow), and Diluted Adjusted Earnings Per Share. Adjusted Operating
Profit and Adjusted Profit Before Tax exclude certain items that
could distort the underlying trading performance. These measures
may not be calculated in the same way as similarly named measures
reported by other companies. Management believes that these
measures provide valuable additional information for users of
Rentokil Initial's Financial Statements in order to better
understand the underlying trading performance in the year from
activities and businesses that will contribute to future
performance. Adjusted Operating Profit represents the performance
of the continuing operations of the Group (including acquisitions)
and enables the users of the accounts to focus on the performance
of the businesses retained by the Group, and that will therefore
contribute to the future performance. The Group's internal
strategic planning process is also based on these measures, and
they are used for incentive purposes. Revenue and Adjusted
Operating Profit are presented at CER unless otherwise
stated.
Summary of financial performance (at CER)
Regional Performance
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Revenue
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Organic
Revenue
growth
excluding
disinfection
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Organic
Revenue
growth
including
disinfection
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Q3
2023
£m
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Q3
2022
£m
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Change
%
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Q3
2023
%
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Q3
2023
%
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|
|
|
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North America
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870
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402
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116.5%
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2.2%
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2.2%
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Pest Control
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847
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379
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123.5%
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2.3%
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2.3%
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Hygiene & Wellbeing
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23
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23
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(0.7%)
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(0.1%)
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(0.7%)
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Europe (inc LATAM)
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274
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241
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13.9%
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9.5%
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8.8%
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Pest Control
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135
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113
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19.9%
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9.2%
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9.2%
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Hygiene & Wellbeing
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84
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79
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6.4%
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8.2%
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6.0%
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France Workwear
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55
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49
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12.2%
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12.2%
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12.2%
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UK & Sub Saharan Africa
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100
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91
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10.1%
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5.2%
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5.2%
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Pest Control
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50
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47
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6.5%
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6.1%
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6.1%
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Hygiene & Wellbeing
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50
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44
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13.8%
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4.2%
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4.2%
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Asia & MENAT
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91
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82
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10.2%
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8.9%
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6.9%
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Pest Control
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68
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60
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12.9%
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10.4%
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10.4%
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Hygiene & Wellbeing
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23
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22
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2.8%
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4.5%
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(2.5%)
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Pacific
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66
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57
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14.6%
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7.6%
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7.6%
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Pest Control
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33
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26
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23.1%
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8.6%
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8.6%
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Hygiene & Wellbeing
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33
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31
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7.2%
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6.8%
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6.8%
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Central
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3
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5
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(44.4%)
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(44.4%)
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(44.4%)
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Total at CER
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1,404
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878
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59.9%
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4.3%
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4.0%
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Total at AER
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1,382
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901
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53.3%
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Category Performance
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Revenue
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Organic
Revenue
growth
excluding
disinfection
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Organic
Revenue
growth
including
disinfection
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||
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|
Q3
2023
£m
|
Q3
2022
£m
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Change
%
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Q3
2023
%
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Q3
2023
%
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|
|
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|
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Pest Control
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1,133
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625
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81.2%
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3.8%
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3.8%
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Hygiene & Wellbeing
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213
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199
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7.0%
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5.7%
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4.0%
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France Workwear
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55
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49
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12.2%
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12.2%
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12.2%
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Central
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3
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5
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(44.4%)
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(44.4%)
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(44.4%)
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Total at CER
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1,404
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878
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59.9%
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4.3%
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4.0%
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Total at AER
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1,382
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901
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53.3%
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Summary of financial performance (at AER)
Regional Performance
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|
Revenue
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||
|
|
Q3
2023
£m
|
Q3
2022
£m
|
Change
%
|
|
|
|
|
|
|
North America
|
861
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418
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105.6%
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Pest Control
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839
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394
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112.4%
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Hygiene & Wellbeing
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22
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24
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(6.4%)
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Europe (inc LATAM)
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273
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243
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12.3%
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Pest Control
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133
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114
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16.9%
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Hygiene & Wellbeing
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84
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79
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5.6%
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France Workwear
|
56
|
50
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12.6%
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|
|
|
|
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UK & Sub Saharan Africa
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99
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91
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8.3%
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Pest Control
|
49
|
47
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4.7%
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Hygiene & Wellbeing
|
50
|
44
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12.1%
|
|
|
|
|
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Asia & MENAT
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85
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86
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(0.2%)
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Pest Control
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63
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63
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1.2%
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Hygiene & Wellbeing
|
22
|
23
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(4.0%)
|
|
|
|
|
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Pacific
|
61
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58
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5.1%
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Pest Control
|
30
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27
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12.9%
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Hygiene & Wellbeing
|
31
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31
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(1.7%)
|
|
|
|
|
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Central
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3
|
5
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(44.4%)
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Total at CER
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1,382
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901
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53.3%
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Category Performance
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Revenue
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||
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Q3
2023
£m
|
Q3
2022
£m
|
Change
%
|
|
|
|
|
|
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Pest Control
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1,114
|
645
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72.8%
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Hygiene & Wellbeing
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209
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201
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3.4%
|
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France Workwear
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56
|
50
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12.6%
|
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Central
|
3
|
5
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(44.4%)
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Total at CER
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1,382
|
901
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53.3%
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Cautionary statement
In order to utilise the 'safe harbour' provisions of
the U.S. Private Securities Litigation Reform Act of 1995
(the "PSLRA") and the general doctrine of cautionary statements,
Rentokil Initial plc ("the Company") is providing the following
cautionary statement: This communication contains forward-looking
statements within the meaning of the PSLRA. Forward-looking
statements can sometimes, but not always, be identified by the use
of forward-looking terms such as "believes," "expects," "may,"
"will," "shall," "should," "would," "could," "potential," "seeks,"
"aims," "projects," "predicts," "is optimistic," "intends,"
"plans," "estimates," "targets," "anticipates," "continues" or
other comparable terms or negatives of these terms and include
statements regarding Rentokil Initial's intentions, beliefs or
current expectations concerning, amongst other things, the results
of operations of the Company and its consolidated entities
("Rentokil Initial" or "the Group"), financial condition,
liquidity, prospects, growth, strategies and the economic and
business circumstances occurring from time to time in the countries
and markets in which Rentokil Initial operates. Forward-looking
statements are based upon current plans, estimates and expectations
that are subject to risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialise, or should
underlying assumptions prove incorrect, actual results may vary
materially from those indicated or anticipated by such
forward-looking statements. The Company can give no assurance that
such plans, estimates or expectations will be achieved and
therefore, actual results may differ materially from any plans,
estimates or expectations in such forward-looking statements.
Important factors that could cause actual results to differ
materially from such plans, estimates or expectations include: the
Group's ability to integrate acquisitions successfully, or any
unexpected costs or liabilities from the Group's disposals;
difficulties in integrating, streamlining and optimising the
Group's IT systems, processes and technologies; the availability of
a suitably skilled and qualified labour force to maintain the
Group's business; the Group's ability to attract, retain and
develop key personnel to lead the business; the impact of
environmental, social and governance ("ESG") matters, including
those related to climate change and sustainability, on the Group's
business, reputation, results of operations, financial condition
and/or prospects; inflationary pressures, such as increases in
wages, fuel prices and other operating costs; supply chain issues,
which may result in product shortages or other disruptions to the
Group's business; weakening general economic conditions, including
changes in the global job market or decreased consumer confidence
or spending levels; the Group's ability to implement its business
strategies successfully, including achieving its growth objectives;
the Group's ability to retain existing customers and attract new
customers; the highly competitive nature of the Group's industries;
cybersecurity breaches, attacks and other similar incidents;
extraordinary events that impact the Group's ability to service
customers without interruption, including a loss of its third-party
distributors; the Group's ability to protect its intellectual
property and other proprietary rights that are material to the
Group's business; the Group's reliance on third parties, including
third-party vendors for business process outsourcing initiatives,
investment counterparties, and franchisees, and the risk of any
termination or disruption of such relationships or counterparty
default or litigation; failure to maintain effective internal
control over financial reporting in accordance with Section 404 of
the Sarbanes-Oxley Act; any future impairment charges, asset
revaluations or downgrades; failure to comply with the many laws
and governmental regulations to which the Group is subject or the
implementation of any new or revised laws or regulations that alter
the environment in which the Group does business, as well as the
costs to the Group of complying with any such changes; termite
damage claims and lawsuits related thereto; the Group's ability to
comply with safety, health and environmental policies, laws and
regulations, including laws pertaining to the use of pesticides;
any actual or perceived failure to comply with stringent, complex
and evolving laws, rules, regulations and standards, as well as
contractual obligations, relating to data privacy and security;
changes in tax laws and any unanticipated tax liabilities; adverse
credit and financial market events and conditions, which could,
among other things, impede access to or increase the cost of
financing; the restrictions and limitations within the agreements
and instruments governing our indebtedness; a lowering or
withdrawal of the ratings, outlook or watch assigned to the Group's
debt securities by rating agencies; an increase in interest rates
and the resulting increase in the cost of servicing the Group's
debt; and exchange rate fluctuations and the impact on the Group's
results or the foreign currency value of the Company's ADSs and any
dividends. The list of factors presented here is representative and
should not be considered to be a complete statement of all
potential risks and uncertainties. Unlisted factors may present
significant additional obstacles to the realisation of
forward-looking statements. The Company cautions you not to place
undue reliance on any of these forward-looking statements as they
are not guarantees of future performance or outcomes and that
actual performance and outcomes, including, without limitation, the
Group's actual results of operations, financial condition and
liquidity, and the development of new markets or market segments in
which the Group operates, may differ materially from those made in
or suggested by the forward-looking statements contained in this
communication. Other than in accordance with the Company's legal or
regulatory obligations (including under the Listing Rules and the
Disclosure Guidance and Transparency Rules), the Company does not
undertake any obligation to update or revise publicly any
forward-looking statement, whether as a result of new information,
future events or otherwise. Nothing in this announcement should be
construed as a profit forecast.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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Date:
19 October 2023
|
RENTOKIL INITIAL PLC
|
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|
/s/
Catherine Stead
|
|
|
Name:
Catherine Stead
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Title:
Company Secretary
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