By Ankita Bora
(Reuters) -Rentokil reported a pick up in North American organic revenue growth in the third quarter, helped by price increases in its top market, the United States, sending shares in the pest control company as much as 18% higher on Thursday.
Rentokil, the largest pest control company in the U.S. since its acquisition of Terminix, has issued a string of profit warnings over the past year due to weakness in North America.
“We’re pleased, but not satisfied and not complacent,” outgoing CEO Andy Ransom told an analyst call, adding that U.S. progress needed to be sustained into the fourth quarter.
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The company, which is yet to name a successor for Ransom, has rolled out a revised strategy focused on improving sales through smaller, strategically-placed service hubs, higher digital marketing and door-to-door services.
While its U.S. volumes remained on a downward trend due to demand weakness, the pace of decline has eased, it said.
Third-quarter group organic revenue rose 3.4%, up from 1.6% in the second quarter. That beat some analysts’ expectations, including brokerage Jefferies, which forecast 2.4%.
Organic revenue in North America rose 3.4%, up from 1.4% in the prior quarter.
“Investors have long-awaited signs that management’s sales and marketing efforts and revised strategy are paying off, and this is another small step forward to showing this,” Barclays analyst James Rose said in a note.
Rentokil shares, which have risen about 13% so far this year, were up 11% at 452 pence at 1254 GMT, topping Britain’s benchmark FTSE 100 index, which was up 0.5%.
The company said its cost cutting remained on track, and it expects an operating margin above 20% in North America post-2026.
Rentokil recently sold its French workwear, linen, and clean room business to sharpen its focus on pest control.
(Reporting by Ankita Bora and Yadarisa Shabong in Bengaluru. Editing by Subhranshu Sahu and Mark Potter)
