Rentokil
prophecies come true
In line with
the forecast made at the Annual General Meeting in May, Rentokil failed
to meet its hallowed 20% target for the first time this half year. The
company's pre-tax profit results were announced this week.
Interim statement
results of the six months resulted in a growth profit of 10.2% and earnings
up per share up by 10.5%. Rentokil's shares, which until the end
of last year had out performed the FTSE 100 index by more than 400% since
1990, have been the index's worst performer this year, falling more
than 47%.
Overall,
turnover growth being held back was attributed to contract losses in some
specific low margin activities. Reductions in turnover and profit were
seen in UK catering, hospital services, management services and cleaning,
as well as US personnel.
The UK turnover
was down 2.3% to £659m due to a range of reasons including low margin
activities within the sectors above. Europe, however, showed an excellent
growth of 15.7%; strong growth was shown in textile services and healthcare.
Business sectors in the company which have made a difference to the overall
turnover are hygiene services which had a good increase of 6.8% and security
services which produced a 7.7% growth in turnover.
Property
services with its low margins in the UK of catering and management services
fell by 12.2% to £144m.
The company
has decided to review its 20% objective and Sir Clive Thompson, chief
executive said their objective now is: "to substantially outperform
the support services sector (as measured by total shareholder return)
over the next 5 years - through a constant focus on core activities
and a continual drive to improve the quality of service delivery, the
quality of technical leadership, the quality of culture, the quality of
management and the quality of earnings."
Julie
Crisp
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