Rentokil growth tops 20% again

BY NIGEL COPE

Rentokil made it 12 in a row yesterday when the pest control to tropical plants group fulfilled its annual target of 20 per cent profits growth.

Strong performances in Britain and North America helped push pre-tax profits 20.4 per cent ahead to £177m in the year to December. Sales grew by 22 per cent to £734m.

Analysts said underlying profits grew by about 16 per cent with acquisitions accounting for the rest. Rentokil spent £25m on 20 acquisitions during the year, with October's £8m purchase of Sterling Granada, a security business, the most significant.

The company had net cash of £67m at the year-end and Clive Thompson, chief executive, said the company would be looking for bolt-on acquisitions, particularly in its security division which includes the Securiguard business acquired in a contested takeover in 1993.

He said: "We are governed by availability but there are security businesses both here and in the US that we would be interested in."

Rentokil has already improved margins at Securiguard by pruning costs. Early cuts includes management fees and the sale of less profitable businesses such as escorting court case defendants. Profits in the security division rose from £1.8m to £5.6m, helped by a full-year contribution from Securiguard.

Elsewhere, profits increased 29 per cent in Britain helped by strong performances in security and cleaning. Profits in the US were up 22 per cent. Europe proved a disappointment with good results in Belgium, Switzerland and Spain held back by slow economic recovery in other European countries.

In Asia, good results in Malaysia, Thailand and Hong Kong were dissipated by slow growth in Australia. Mr Thompson said: "We made some management mistakes there in the early 1990s. We have put them right but the results take a little while to come through."

Last August the four regional directors in the Australian subsidiary were replaced after the division's lacklustre performance.

Earnings per share rose by 21 per cent to 11.74p and the dividend was raised by the same amount to 3.54p.

The shares slipped from 221p to 218p.