Shares in Rentokil leap as pest control giant trims costs

Shares in Rentokil have leapt higher after the world's largest pest control firm reported rising sales and cost-cutting action to bolster its performance in the US.

The London-listed business saw its share price rise by nearly a 10th on Thursday morning, after revealing its headcount had reduced by at least 250 staff over the past month.

It reported revenues of £1.4 billion between July and September, 3.6% higher than the same period last year, at constant currencies.

The company, which is based in Crawley, West Sussex , saw its share price dive last month after downgrading its sales and profit expectations for the year.

It said it had overspent during the summer on resources to meet an expected level of demand for its services in North America , its biggest global market, which ended up being slower than anticipated.

Since then, the firm said it has taken action to reduce its cost base, including more tightly managing overtime and staffing as it moves away from the typical "peak" summer season.

It also revealed a reduction in its sales, service and administration headcount of about 250 staff, which it said was on top of "normal ongoing seasonal" staff changes.

Furthermore, Rentokil said it had been able to successfully tweak its prices, with cost inflation being passed on to customers, without affecting its customer retention in the US.

Chief executive Andy Ransom said: "In North America, we recognise the business has underperformed and we are focused on delivering the operational improvements required.

"We are expanding our initiatives to increase organic growth and we are taking action to mitigate cost overruns."

Rentokil agreed to buy former US rival Terminix in a 6.7 billion US dollar (£5.2 billion) deal in 2021, a tie-up which saw it become the biggest firm in the market worldwide.

Billionaire activist investor Nelson Peltz built up his stake in the business earlier this year through his firm, Trian Partners, which said it is working on ways to improve shareholder value.