Investors are impressed with pest control firm Rentokil’s (RTO) upbeat third quarter trading update, boasting a 16.6% rise in revenue through acquisitions and organic growth.

Shares in the company, which was one of the early winners from the Brexit vote, trade 3.6% higher at 233.6p.

The Rio 2016 games partner reports an organic 3.1% rise in revenue from on-going operations, while the rest was achieved through acquisitions.

This is encouraging as Rentokil acquired 13 businesses for its emerging and growth markets, which both grew by over 20%, removing concerns of acquisitions covering flat trading levels.


Before the acquisitions, combined annual revenues of these businesses were £88m. The acquisition strategy seems to be paying off as the revenue from these companies increased to £109m.

Morgan Stanley believes the business is good value for money and says there is no change in its outlook as management is confident in its future performance. Rentokil aims to drive sales further in the pest control division through market share gains.

This division has performed well, achieving organic growth of 5.9% and the hygiene business improved with growth of 3.2%.

Rentokil says most of its regions are experiencing growth, particularly in the UK, Asia, Pacific, Latin America and North America.

However, conditions continue to be difficult in Europe, specifically France, although overall these markets achieved a modest increase in revenue.

Issue Date: 19 Oct 2016