Bugs squidger, rats catcher and workwear washer Rentokil Initial PLC (LON:RTO) topped expectations with full year results, and rewarded shareholders with a 15% dividend hike.
Revenue from continuing operations rose 12.6% on a constant exchange rates (CER) basis and 24.2% on an actual exchange rates (AER) basis to £2.16bn in 2016 from a year earlier.
The market had pencilled in a figure of £2.11bn.
On a like-for-like (LFL) basis, which strips out the impact of acquisitions and disposals, revenue was 3% higher than in 2015.
The Pest Control division was the star performer, with organic revenue growth of 5.7%, versus organic growth of 4.6% the previous year. The Hygiene division’s organic growth rate accelerated to 3.1% from 2.3% but the workwear division saw a 1.3% year-on-year decline in LFL revenue, though this was an improvement on the 3.2% drop-off in 2015.
Adjusted pre-tax profit, which analysts had expected to be around £240.8mln, weighed in at £252.1mln, up 16.7% on a CER basis and 32.5% on an AER basis.
The board has proposed a 15.5% increase in the final dividend to 2.38p, which would make the full-year pay-out 15% higher year-on-year at 3.37p.
"In 2016 we have continued to execute our strategy at pace. Our Organic Revenue growth of 3.0% is at its highest level for 10 years with accelerated growth in Pest Control and Hygiene showing continued performance momentum. In addition, we have exceeded our financial targets, growing ongoing revenues by 12.6%, ongoing operating profit by 11.5% and delivering £156mln in free cash flow,” said Andy Ransom, chief executive officer of Rentokil Initial.
The market was underwhelmed, leaving the shares more or less unchanged.
“We continue to migrate our revenues into Emerging and Growth markets and have acquired 41 companies in the year with combined annualised revenues of some £124mln,” Ransom continued.
"Prospects in the majority of our markets are good and, while conditions in France remain difficult, we are confident of making further progress in the coming year," Ransom said.