Rentokil shares slide on fourth profit warning

25-07-2008

Rentokil shares slide on fourth profit warning
Pest control firm Rentokil has issued its fourth profit warning in eight months in its second quarter statement, sending shares plunging by over 30 per cent.

The company, which offers hygiene and pest control services as well as delivery through City Link, said it now expects pre-tax profit for the full year to be £35 million lower than its first quarter forecast of £151 million.

Rentokil blamed restructuring its UK washrooms business and the integration of washrooms and pest control acquisitions in Australia for the difficulties.

However, the firm said it has made progress with City Link, its parcel delivery business blamed for a profit warning in the first quarter.

Chief executive Alan Brown said: "The challenges we face are considerable, but we are making progress on achieving our primary objective of delivering on customer service and focusing on operational excellence.

"I remain robust in my belief that this is the correct agenda to pursue and that Rentokil Initial has significant potential over the medium to long term."

The profitability of the company’s UK washroom business deteriorated in the quarter as it struggled with customer service, which has also been a problem with City Link.

Mr Brown, who was hired earlier this year to turnaround the business, said about a third of the downgrade was due to an economic downturn and the rest to the poor integration of acquisitions and misguided cost-cutting plans by previous management.

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