Rentokil Initial PLC (LON:RTO) said it skipped the interim dividend but considers a final distribution if trading continues in line with expectations in the second half.
The pest control and hygiene services provider said trading in the six months to June 30 was resilient but there are significant uncertainties, mostly around future demand as more countries emerge from lockdown and as businesses deal with the economic reality post COVID-19.
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Revenues are expected to improve, having dropped 12% in April but risen 4% in June, although a second wave of coronavirus infections could hinder progress.
The firm saved £87mln in the first half and plans a further £35mln savings in the rest of the year.
Working capital outflow for the year is expected to be £10-20mln, with capital expenditure of £225-235mln.
In the first half, revenue dipped 1% to £1.2bn, for profit before tax down 46% to £61mln due to higher costs. Free cash flow was £143mln.
“Rentokil has a strong balance sheet and there is potential upside opportunities from increased demand for hygiene disinfection services (re-opening & building into regular contracts) but believe the share price reflects this,” analysts at Peel Hunt commented.
Shares added 4% to 569.8p on Thursday at the opening bell.