By Michele Maatouk
Date: Thursday 16 Apr 2020
LONDON (ShareCast) - (Sharecast News) - Pest control company Rentokil posted a rise in first-quarter revenue on Thursday as it said the impact of the coronavirus crisis in the second quarter is set to be greater in the last two weeks of March as more countries were locked down.
Rentokil - which cancelled its dividend and withdrew 2020 guidance last month due to the pandemic - said it made a good start to the year, with group ongoing revenue up 7.2% to £630.5m and ongoing operating profit growing "slightly ahead" of revenue in the three months to 31 March 2020.
In the pest control division, ongoing revenue was up 9.3%, while the hygiene business saw a 4.6% increase and Protect and Enhance revenue rose 1.9%.
"While the net impact from the coronavirus outbreak was not significant for the first 10 weeks of the year, we saw a marked impact in the last two weeks of March, as the crisis deepened across the world," the company said.
In March, overall group ongoing revenue was 4.4% above the prior year, with pest control revenue up 6.6% and hygiene 2.6% higher. Rentokil's Protect & Enhance segment was more impacted, however, with ongoing revenue down 2.3%, while revenue from its France workwear operations fell 9.8%.
It pointed out that the pest control business has been designated an essential service in most of its markets and the impact of the virus is also mitigated somewhat by the largely contractual nature of the portfolio and the fact that it is less impacted by business closures.
In Italy, which has been in severe lockdown for several weeks, revenues declined 15.3% in March compared to a 5.7% decline in the quarter. In North America, which is estimated to be around two weeks behind Europe, revenues grew 8.5% in March compared to 10.4% in the quarter.
The company, which said in March that it had implemented pay cuts across the board and all senior management grades and a freeze in hiring, among other things, has drawn down funds under the government's Covid Corporate Financing Facility. As a result, it now has about £1.2bn of cash, of which £550m is drawn down on its revolving credit facility.
Chief executive Andy Ransom: "Our people will always be the essential driver of our success and while we are having to make some extremely difficult decisions to introduce furlough schemes and reduce salaries this is helping to protect the company and our financial resources.
"The actions we are taking now will allow us to rebuild our business to full strength and to play an ever bigger role through the recovery phase in protecting public health and ensuring safe working environments around the world."
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