Outlook: Sir Clive's glory days may be over

SOMEHOW, Mr Ten Per Cent does not have quite the same ring to it. Moreover, it brackets Sir Clive Thompson with that breed of commission men who make their living off the talents of others, be they footballers, film stars or for that matter writers.

Sir Clive's famous pledge to grow earnings at a compound rate of 20 per cent has always been the sort of hurdle that Rentokil Initial would eventually knock over rather than vault gracefully. Twice in Sir Clive's 17 years at the helm his pest control business has failed to jump high enough, unlike the fleas that it famously zaps. The most recent occasion was 1998, when the strength of the pound and the Asian meltdown conspired to limit profit growth to 17.6 per cent.

Suddenly that sort of underperformance is beginning to look suspiciously like a trend. Sir Clive has taken a look at those pesky trading figures for the first quarter of this year and reckons that Rentokil's profits will only increase by 10-15 per cent at best. It is important to get this into perspective. There are plenty of chief executives who would sell their grannies for earnings growth of that magnitude in these days of low inflation or, in some markets, outright deflation.

The market treated yesterday's news savagely, which is hardly surprising for a stock that has traded for years on its record. In fairness to Sir Clive, he was the first to put his hands up and admit that Rentokil had failed miserably to manage expectations in the City.

Are we witnessing the first signs of a deeper rot within this finely tuned empire? The suspicion is that Rentokil has been masking a steady decline in its organic growth with a stream of acquisitions. Three years on from the pounds 2.2bn BET takeover, Rentokil has run out of cost-saving, the catalyst of earnings growth. Moreover, Sir Clive has discovered that leveraging sales can be a slow job. Just because a customer bought hand towels from BET, he is not necessarily going to buy potted plants or a damp course from Rentokil.

It may be that even Sir Clive's legendary management skills are not up to the task of generating further organic growth from the mature markets in which he operates. The obvious temptation in those circumstances is for Sir Clive to buy more time with another blockbuster deal. Rentokil's cash flow provides him with enough firepower. But then again, the market would see straight through any such ruse. It may be that Sir Clive's glory days are indeed behind him.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Under the skin: Sarah Kane in May 1998
theatreThe story behind a new season of Sarah Kane plays
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
Sport
Bradford City's reward for their memorable win over Chelsea is a trip to face either Sunderland or Fulham (Getty)
football
News
Lars Andersen took up archery in his mid thirties
video
Voices
Focus E15 Mothers led a protest to highlight the lack of affordable housing in London
voicesLondon’s housing crisis amounts to an abuse of human rights, says Grace Dent
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea