The year has started well for the world’s leading pest control and hygiene firm Rentokil Initial (RTO) going by today’s first quarter trading update.

Ongoing revenues for the three months to 31 March are up 8.9% to £603.6m thanks to 4% organic growth - an improvement from 3.2% in the first quarter last year - and 4.9% growth from acquisitions.

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Pest control, which accounts for over 60% of turnover and close to 70% of operating profits, saw revenues grow by 12% with 5% organic growth and the rest coming from acquisitions.

Growth markets, which include North America, the UK, Germany, Benelux, the Pacific and the Caribbean, saw turnover grow by 12.1% in the first quarter helped by acquisitions. Emerging markets saw revenues grow by 11.5% in the first quarter.

The hygiene business, which accounts for 22% of revenues and operating profits, saw ongoing revenues grow by 7.2% with underlying growth of 4.3%, a big step up from 1.8% underlying growth in the same quarter last year.

Chief executive Andy Ransom is ‘pleased’ with firm’s performance so far and remains ‘confident of another year of successful growth in line with market expectations’.

On top of the strong underlying sales trends, the firm now expects a pre-tax surplus of around £40m from the buy-out of its defined benefit pension scheme which will be added to the coffers some time in 2020, providing more firepower for acquisitions.

The one weak spot remains Protect & Enhance where revenues were flat compared with the first quarter of 2018. Rentokil doesn't break down the contribution of the separate parts but it's fair to assume that Property Care continues to struggle.

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Issue Date: 18 Apr 2019