(Alliance News) - Rentokil Initial PLC on Thursday reported strong profit growth in 2021 as the firm's acquisition strategy lead to booming revenue, which was also backed up by near double-digit organic growth.
Shares in the FTSE 100-listed pest control and hygiene services were down 8.4% in London on Thursday morning at 479.30 pence each.
In 2021, Crawley, England-based Rentokil posted pretax profit of GBP325.1 million, up 41% from GBP229.8 million in 2020.
Revenue increased 5.7% to GBP2.96 billion from GBP2.80 billion. It noted organic revenue growth was 9.8%, with Pest Control organic growth 8.1% and Hygiene up 7.4%.
"In 2021 we delivered an excellent performance in revenue, profit and cash, underlining the strength in our core businesses and markets," Chief Executive Andy Ransom said.
"Pest Control had a particularly strong year, with organic growth of 8.1% reflecting further progress in the execution of our innovation and technology strategy. Our proprietary, next generation pest control innovations continue to differentiate Rentokil and set new standards of performance in support of our customers. Our pipeline of innovations remains strong with over 50 projects underway. We are also very pleased with the performance of our Hygiene business, which showed particularly encouraging organic growth momentum of 7.4%."
Rentokil said it was an "outstanding" year for M&A in 2021, having acquired 52 businesses.
"Our total cash consideration for acquisitions this year amounts to GBP463.1 million, in line with our up-weighted guidance given at the interim results in July," it noted.
It said the Terminix Global Holdings Inc deal will lead to cost synergies of at least USD150 million.
The company proposed a final dividend of 4.30 pence, taking its 2021 total dividend to 6.39p - up 18% from 2020.
Ransom added: "2021 has been an outstanding year. We have demonstrated the core strength of our businesses, growing revenue, profit and cash ahead of our new medium-term growth targets. We have entered into a transaction with compelling strategic logic which will make us the number one player in North America, the world's largest pest control market, whilst delivering substantial value creation for shareholders.
"The last two years have been challenging, but we have proved that we can both adapt and grow the business. With the worst of the pandemic hopefully behind us, and by building further on the momentum of 2021 in our core businesses, we are confident of delivering further good progress in the year ahead."
By Paul McGowan; paulmcgowan@alliancenews.com
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Rentokil Initial (RTO)