Rentokil shares slump 18% on slower North America growth
Rentokil's Second-Quarter Performance and Market Reactions
July 30 (Reuters) - British pest control firm Rentokil on Thursday said second-quarter sales growth in North America slowed sequentially and it had more to do to address its underperformance, sending its shares tumbling almost 18% in early trading.
Company Statements and Strategic Initiatives
Here are some more details:
Leadership Commentary
• "We are not delivering on our growth potential in many of the markets we operate in, nor adequately benefiting from our scale," Chief Executive Mike Duffy said.
Market Challenges
• Inflationary pressures, high interest rates and weak consumer sentiment linked to the Iran war have led Rentokil's customers to scale back spending on routine services.
Strategic Responses
• Last year, Rentokil introduced smaller, strategically-placed service hubs, higher digital marketing and door-to-door services as part of its strategy to tackle weakness in North America.
Financial Results and Outlook
Revenue Growth Figures
• The company reported organic revenue growth of 3.6% in its largest market in the three months to June 30, down from 3.9% in the first quarter.
Future Expectations
• "Looking forward, we have seen some weakness in North America Residential lead flow towards the end of the second quarter and into July," Duffy said.
• Still, Rentokil said full-year profit would meet market expectations.
Analyst Reactions
• "Given the comments on lead flow exiting the quarter, we expect confidence in (full year) outlook to reduce," J.P. Morgan analysts said in a note.
Industry Comparison and Share Performance
Peer Performance
• Rentokil's results echoed troubles at U.S. rival Rollins, which last week fell short of Wall Street estimates for its second quarter.
Share Price Impact
• Shares of the London-listed company were down 17.7% at £3.65 as of 0810 GMT, on track for their worst day since September 2024 if losses hold.
(Reporting by Neeshita Beura in Bengaluru; Editing by Janane Venkatraman and Nivedita Bhattacharjee)
