Rentokil Initial PLC (LSE:RTO) the pest controller, has seen its shares rally recently, but investors may be keen to see how the company is tackling growing its operating margin before pushing them higher.
In full-year results, released last month, the Crawley-based firm announced that underlying operating margins had risen to 15.4% in 2022.
These figures “undermined a bearish view on margins that one or two brokerages had been promoting” according to Steve Clayton, head of equity funds at Hargreaves Lansdown.
Thursday's first quarter trading update will offer the group a perfect chance again to disprove these bearish views.
The company revealed that it expected underlying operating margins to rise to 16.5% in 2023.
Synergy costs are still expected to pop up this year following Rentokil’s US$6.7bln purchase of Terminix last year.
Costs of the acquisition reduced full-year pre-tax profits despite revenue leaping by around a quarter.
Rentokil announced it would continue looking for more purchase opportunities in 2023 and anticipates spending £250mln this year on mergers and acquisitions.
Shares in Rentokil opened at around 600p on Wedensday, having risen by around 17% in the last month alone.