Rentokil Initial PLC (LSE:RTO) shares plunged 17% to 368p after the pest-control group warned of weaker residential demand in North America and abandoned a key margin target.
The company said residential customer leads had softened towards the end of the second quarter and into July.
It also retired its target for North America's operating margin to reach 20% in 2027, as new chief executive Mike Duffy prioritises investment and volume growth over short-term margin expansion.
Rentokil nevertheless maintained its outlook for profit in the 2026 financial year to meet market expectations.
First-half revenue increased 6.7% to $3.6 billion, with organic growth of 3.6%. Adjusted operating profit rose 6.6% at constant currencies to $556 million, while the margin improved by 0.3 percentage points to 15.5%.
North American organic revenue increased 3.7%, although quarterly growth slowed to 3.6% from 3.9%. Growth from its core pest-control services eased to 2.4% in the second quarter, with commercial revenues particularly weak.
Duffy, who joined four months ago, said: "We are not yet delivering on our growth potential, leaving significant opportunities to improve."
He plans to simplify a business operating across 90 countries, standardise its branch network and reinvest cost savings in North America.
Free cash flow rose 13% to $318 million, helping net debt fall to $3.6 billion from $4.2 billion. Rentokil also recorded a further $47 million provision for termite damage claims, leaving its current estimate for 2026 cash outflow at $115-$125 million.
The interim dividend increased 8% to 4.48 cents a share.
