Upbeat Trading Statement from Rentokil Initial
Rentokil acquires Residex
Rentokil Initial plc (FTSE: RTO, "the Company") announces its continued expansion in North America with the acquisition of pest control and turf products distribution business Residex LLC ("Residex") for US$30m.
Residex is the largest independent products distribution company in the US, with annualised revenues for the 12 months prior to acquisition of $113m. The acquisition increases the scale of the Company's existing pest and turf products business, which more than doubles in size. It creates the second largest business of this type in the US market, delivering national coverage and a greater density footprint.
Andy Ransom, Chief Executive of Rentokil Initial plc, said: "I'm delighted to welcome the Residex team to Rentokil Initial. North America is a strategic growth market for Rentokil with great potential for continued profitable growth and our acquisition pipeline remains strong. The addition of Residex means that our business in North America is set to deliver annualised revenues of around $1 billion by the end of the year - some two years ahead of our expectations."
In the first half of 2016 the Company completed a series of 20 highly-targeted city-based acquisitions, predominantly in Pest Control in North America, Asia, Pacific and Europe. Total annualised revenues in the year prior to acquisition for these businesses acquired, including Residex, were c. £100m.
Rentokil wins two-year contract with the US government to combat Zika virus
Rentokil North America has been awarded a contract by the U.S. Centers for Disease Control and Prevention ("CDC") to help control the species of mosquito that could potentially carry the Zika virus across the USA and its protectorates. The requirement of the programme is to provide pest control services until June 2018, subject to government review. As required, Rentokil will deploy its network of more than 4,000 pest control experts alongside its global technical resource to target affected or high-risk areas. Additionally, a key component of the contract includes support services that entail community outreach, surveillance and inspection, and support for the distribution of materials and educational information.
Andy Ransom, Chief Executive of Rentokil Initial plc, said: "I'm proud that Rentokil has been selected to support the work of the CDC throughout the USA. Across the world we combat the dangers to public health from mosquitoes such as Dengue fever in Asia, to Malaria and West Nile virus in Africa and the Americas. Our depth of expertise and experience in global mosquito control is simply unmatched."
Following its First Quarter trading announcement on 20 April the Company has continued to perform well and our expectations for 2016 at constant exchange rates remain unchanged.
In respect of the outcome of the EU Referendum and the UK's decision to leave the EU, we advise that approximately 90% of the Company's revenues are derived from outside the UK and there is minimal cross-border trading across its global businesses. Sterling has weakened significantly since the announcement and, if recent rates were to prevail for the remainder of the year, the estimated favourable impact of currency movements on our profit for 2016 would be in the range of £25m to £30m. This would be an increase of £10m to £15m on the guidance previously given at the time of our Preliminary results.
We also note that on 29 June 2016, Standard & Poor's removed its negative outlook from the Company's BBB debt rating, reflecting continued good progress in the execution of the Steritech integration.
The Company will provide more details on its H1 performance and its prospects for the remainder of 2016 at its Interim Results on 28 July 2016.
About Products Distribution
The Company's existing Target Specialty Products business is a leading US national wholesale distributor of specialty agricultural chemicals, application equipment, products, supplies, services and education. It provides products and services to both private and public sector industries including structural pest control, landscape construction and maintenance, golf course maintenance and turfgrass maintenance, production nursery, industrial vegetation management, aquatic, forestry and vector control.
Residex LLC is a Michigan headquartered pest products and turf management products distribution company. It was founded in 1946 and in 2010 it merged with Turfgrass, adding turf products to Residex's predominantly pest products business. Today the company's sales are approximately 50 per cent pest products and 50 per cent turf products. It sells its products throughout the US and Canada with a particular focus on the Midwest, South East and North East US.
For additional information, please visit www.rentokil-initial.com.