Investment: Rentokil finally slips up on the percentage play
Thursday 20 August 1998
To be fair, Rentokil didn't miss by much. Exclude the effects of the strong pound, which depressed the value of overseas profits, and earnings were up 26 per cent. But Sir Clive isn't making any excuses. And he is doggedly sticking to the target even though he admits it has become a bit of a millstone.
This looks unrealistic. Although Rentokil's profit performance was respectable, sales were not. Even allowing for exchange rates, revenue growth in the UK and Asia-Pacific was pedestrian. In North America sales actually fell as Rentokil sold unwanted businesses and pulled out of low-margin contracts. Only continental Europe, emerging from a prolonged downturn, lifted the gloom with a 17 per cent increase.
Sir Clive reckons Rentokil can meet its target without large acquisitions. But operating margins can only stretch so far and sooner or later the company will need a repeat of its 1996 acquisition of BET, with the resultant cost savings and efficiency gains.
Given its size, however, Rentokil will find suitable deals a lot harder to come by. And the suspicion remains that meeting the earnings target will be more about questionable accounting policies - Rentokil has decided not to write off goodwill on acquisitions against profits - than true growth.
Rentokil shares slipped 14p to 365p yesterday and are down 20 per cent from their June high. But they still trade on a chunky multiple of almost 30 times forecast full-year earnings. Given the uncertainty over Rentokil's future growth, the shares are high enough.
- 2 Disney heiress Abigail disowns her share of family profits in West Bank company
- 3 Israel's propaganda machine is finally starting to misfire
- 5 'Hello mum, this is going to be hard for you to read ...'
Russell Brand accuses FOX News anchor Sean Hannity of terrorism after aggressive Israel-Gaza debate
Sally Farmiloe dead: Howards' Way actress, and former mistress of Jeffrey Archer, dies aged 60
Sabina Altynbekova, the girl branded 'too good looking' for volleyball, says social media obsession with her is a 'bit much'
Disney heiress Abigail disowns her share of family profits in West Bank company
Australian model Robyn Lawley stages naked protest against huge coal mine seven times the size of Sydney Harbour
The secret report that helps Israel hide facts
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
A day in the life of Vladimir Putin: The dictator in his labyrinth
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Boozy, ignorant, intolerant, but very polite – Britain as others see us
- < Previous
- Next >
iJobs Money & Business
£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...
£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...
£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...
£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...