Rentokil boosted by heatwave surge in insect and rat call-outs

Rentokil Initial has said a surge in summer call-outs for insect and rat catching helped boost annual results as last year’s heatwave sent pest numbers soaring.

The group said it saw a leap in call-outs for pest control across the UK and Europe in the final six months of 2018, which helped underlying sales in the division jump 10.1% higher across the continent and 4.2% higher in Britain.

Its pest control boost contributed to an 8.8% rise in underlying pre-tax profits to £308 million in 2018, sending shares in the FTSE 100-listed group up 5%.

The firm also announced that chairman John McAdam will retire in May after more than 10 years and will be replaced by former InterContinental Hotels Group chief executive Richard Solomons.

Andy Ransom, chief executive of Rentokil, said 2018 had been a “very good year” for the group and nudged up the outlook for 2019.

He said: “We are confident of delivering further progress in 2019 and anticipate a slight increase in market expectations for 2019.”

Rentokil revealed it saw wasp call-outs double across the UK and Europe last year while call-outs for fly control surged by nearly a third and were 14% higher for rat-catching services across Britain.

It saw strong demand for its new innovation called Lumnia for flying insect control – claiming to be the world’s first to use LED lights to attract them.

Rentokil said it has sold more than 60,000 already for the product, which was developed in the UK.

The firm said overall revenues rose 13.2% to £2.5 billion in 2018, as its performance was also given a fillip by a record year for acquisitions after it completed 47 deals.

With acquisitions stripped out, revenues rose 3.7% – with sales in pest control up 4.8% and 2.8% higher for its hygiene division.

The group made 42 acquisitions worldwide last year in pest control, four in hygiene and one small Ambius business.

But its Cannon Hygiene merger in the UK has proved troublesome with the competition watchdog and Rentokil was ordered last month to sell several large supply contracts in order to ease concerns.

The Competition and Markets Authority (CMA) said the tie-up would result in “higher prices or a worse service for customers” unless Rentokil offloaded the contracts.

Rentokil bought Cannon in January 2017 for an undisclosed sum and in April the CMA called in the merger for investigation.

But Rentokil said the contracts it must sell represent a “small part” of the Canon business and cheered the deal for helping revenues jump 19.5% higher across its UK and rest of the world division.