Rentokil Initial PLC (LON:RKO) saw strong growth in demand for its hygiene services in a year that will be remembered for the coronavirus (COVID-19) pandemic.
The FTSE 100 firm saw revenue rise to £2,824mln in 2020 from £2,714mln in 2019, with ongoing revenue climbing 5.0% (or 6.3% on a constant currency, or CC basis) to £2,810mln.
The Pest Control arm saw ongoing revenue grow by 1.0% year-on-year but was put in the shade by the Hygiene division, which saw 36.8% growth, including 62.6% growth in the second half of the year as disinfection of public spaces became a big thing.
Revenue from disinfection services clocked in at £255.1mln for the year, with the bulk of that - £176.3mln – coming in the second half of the year.
Profit before income tax fell to £229.8mln from £338.5mln in 2019, when profits were boosted by a £103.8mln gain on disposals.
Adjusted profit before tax, which excludes one-off items, rose 4.2% (+5.3% on a CC basis).
The company, which in keeping with many others suspended dividend payments during the first wave of the pandemic, announced a final dividend of 5.41p.
“We have shown great agility by launching new disinfection services in 60 countries to address a critical need for customers, accelerated the international expansion of our Hygiene business and have acquired 23 high-quality businesses to build density, particularly in our key North America Pest Control market,” said Andy Ransom, the chief executive of Rentokil.
"Notwithstanding the impact from business closures in lockdown, Pest Control continues to exhibit good structural growth drivers. As the world's largest commercial pest control company, Rentokil is ideally placed to capitalise on the opportunities presented in a post-vaccine world,” Ransom asserted.
“The medium-term prospects for our Hygiene business have never looked more promising as the demand for global hygiene services is sustained post the pandemic, and its innovation, digital leadership and expertise – inside and outside of the wash-room – mean we are targeting medium-term underlying organic growth in core Hygiene comparable to that in Pest Control, at 4% to 6% from 2022.
“2021 will be a year of transition as we cross the bridge from the worst of the crisis in 2020 to, hopefully, a post-pandemic 2022. Thanks to the significant and swift actions we took in 2020, we are strongly positioned for the coming year and expect to see further progress from our core Pest Control, Hygiene and Protect & Enhance categories. We will continue to provide disinfection services as part of the crisis response, but expect volumes and prices to significantly unwind as the year progresses and the crisis hopefully abates,” he added.