Highlights (at CER unless stated otherwise)
Strong overall performance in H1 - ongoing revenue +11.5%, ongoing adjusted operating profit +11.0% and free cash flow of £57.1m (at AER) on track to meet £110m+ target for the year
Improved organic growth - total organic revenue growth +2.5% year on year (FY 2015: +1.8%). Pest Control +5.5%, Hygiene +2.5%; lower level of organic decline in Workwear business of -1.8% (FY 2015: -3.2%) impacted by continued challenging conditions in France and Benelux
Continued strong M&A execution - 20 acquisitions to 30 June 2016 (16 in Pest Control):
- In addition, further expansion in North America with acquisition of pest control and turf products distribution business Residex LLC for US$30m on 1 July 2016. Acquisition doubles in size our existing products business
- Combined annualised revenues for acquisitions (including Residex) of c. £100m:
- Integration of Steritech continues to progress well - on track to meet $25m to $30m profit target for 2016
Pest Control now accounts for over 50% of group revenue and profit, total North America revenue accounts for over 30% of group revenue, post Residex acquisition
Declared 13.8% increase in interim dividend to 0.99p
Expectations for the full year unchanged
Commenting on the 2016 interim results Andy Ransom, CEO of Rentokil Initial plc, said:
"I am pleased with our performance in the first half, and particularly encouraged by the performance of our pest control business and by our continued expansion into our key growth market of North America, which is set to achieve revenues of around $1bn by the end of 2016, some two years ahead of our expectations. Organic growth in Pest Control was 5.5%, with North America Pest Control growing organically by 4.7%.
"Acquisitions continue to play an important part in our growth strategy and the 21 businesses we have acquired year to date have added £100m of incremental revenue to the group and further strengthened our international presence.
"While conditions in certain parts of Europe remain challenging, particularly in France and Benelux, prospects in the majority of our key markets are good and we are on track to achieve our 2016 revenue, profit and cash expectations."
