Rentokil Initial PLC (LSE:RTO) gave investors little to cheer about on Thursday with largely expected news that profit tumbled last year on challenges within its North American.
Shares dropped 4.4% in the wake of the update, which showed statutory pre-tax profit down 17.9% at £405 million.
That said, adjusted profit slightly beat expectations at £703 million, while clarity on its so-far difficult integration with Terminix was a positive, Stifel analysts noted.
Having bought Terminix for $6.7 billion in 2021, Rentokil said on Thursday struggles combining the business had “clearly impacted” its North American division.
Stifel flagged plans to restart integration efforts over the second half of this year following a review, after which cost savings of $100 million were expected post-2026.
A 420p share price target was reiterated, alongside a ‘hold’ rating, which Peel Hunt also echoed on forecasted pre-tax profit of £725.8 million for 2025.
“The risk to forecasts remains to the downside,” Peel Hunt said though, “with the heavy lifting phase of integration only recommencing in the summer and the need to reinvigorate sales growth at the same time”.
Shares were trading at 371p on Thursday.