Rentokil’s shares dropped nearly 17 per cent on Thursday morning, even though group revenue increased by 6.7 per cent in the first six months of the year, reaching $3.5m (£2.6m). Profit before tax also rose by almost 10 per cent to $263m (£196m), thanks in part to pricing strategies that kept pace with inflation. However, the company is now seeing weaker performance in key markets, especially the UK and North America, which together make up a large portion of its business.
North American scale not translating into growth
North America represents almost 59 per cent of Rentokil’s total revenue, yet the market’s size hasn’t led to the expected growth. The company acquired US pest control firm Terminix for several billion pounds in 2022, but results remain below expectations. CEO Mike Duffy admitted the firm is not making full use of its scale and noted a recent slowdown in customer demand, particularly in the residential pest control segment. The firm reported a $995m (£745.8m) increase in North American revenue for the first half of the year, but Duffy said the momentum has clearly weakened, especially in July.
UK operations face housing-driven headwinds
The UK business is also struggling, with Duffy pointing to 'challenging trading conditions' as a key issue. One major factor is a decline in housing demand, which has hurt the asbestos removal division. The firm is shifting strategy to prioritize long-term volume growth over short-term profit increases. Duffy explained this approach would eventually improve cash flow, margins, and organic growth, but the current financial results highlight how quickly economic shifts can impact performance in these markets.