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Rentokil Initial PLC on Thursday said it plans change at its North American business after a challenging year that saw a marked fall in profitability hit by weak margins. The Crawley, England-based pest control company said pretax profit fell 19% to £405 million in 2024 from £493 million in 2023, or by 8.1% on an adjusted basis to £703 million from £766 million. Diluted earnings per share fell 20% to 12.14 pence from 15.07p. Revenue rose 1.1% to £5.44 billion from £5.38 billion with organic revenue growth of 2.8%, with the International business’s revenue up 4.7%. But North America lagged behind with organic revenue growth of 1.5%. The adjusted operating margin however fell to 15.3% in 2024, from 16.7% the year before, impacted by a North America margin reduction to 17.1%. In North America, adjusted operating margin eased to 15.6% in the second half of 2024 from 18.6% in the first half. Rentokil also increased the total dividend by 4.7% to 9.09p from 8.68p. Chief Executive Andy Ransom said: ‘2024 was a challenging year for the group, with lower profits and margins, delivered in line with our trading update in September. Good growth in the International business was held back by the performance in North America.’ In response, shares in Rentokil fell 5.8% to 365.40 pence each in London on Thursday. Ransom said the Terminix integration is making ‘good progress’, but ‘executing it has clearly impacted our North American business performance.’ The integration remains on track to be completed by the end of 2026, he added. Ranson said refining sales and marketing initiatives to drive organic growth will be a key focus in 2025. He outlined a revised brand strategy, focused on nine regional brands, plus national Rentokil and Terminix brands. A branch network is now envisaged of over 500. The sluggish North American performance has continued into the first quarter, held back by continued weak lead generation. Nonetheless, Rentokil expects to achieve 2025 results in line with market expectations. Copyright 2024 Alliance News Ltd. All Rights Reserved.
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