A few weeks ago we flagged the need for pest control and hygiene group Rentokil (RTO) to come up with a positive spin on its 2024 results or the outlook for 2025, but in the event there was little in this month’s announcement to inspire confidence and the shares headed south once more, losing over 10% and taking them back the lows of last October.

Revenue and earnings were broadly in line with (lowered) estimates as a positive performance in international markets was dragged down by weakness in North America, but operating profits slipped and free cash flow was notably lower due to working capital outflows.

The outlook brought little comfort either, with investors sensing weakness in North American sales and lead generation, and the decision to withdraw the previous £200 million cost saving target from the Terminix deal went down particularly poorly no matter how management tried to spin it.

The firm says it is ‘comfortable’ with market expectations for the current year and it is plodding on with bolt-on acquisitions as per usual, but as we have flagged several times in the past, the gulf in performance between Rentokil and US peer Rollins (ROL:NYSE) suggests investors in the UK firm are being short-changed. 

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