Rentokil Initial (RTO) H2 2024 earnings summary

Executive summary

• Revenue for 2024 reached £5.6 billion, up 3.9% year-over-year, with organic growth of 2.8%.

• 2024 performance aligned with revised guidance; strong international growth offset North America underperformance and margin pressure.

• Integration of Terminix advanced, with over 250 branches on unified systems and improved colleague and customer retention.

• Group-wide focus on innovation, digital transformation, and sustainability, including 500,000 PestConnect units installed.

• Key focus areas include enhancing lead generation, sales conversion, and leveraging both power and regional brands.

Financial highlights

• Adjusted operating profit was £860 million, down 7.1% year-over-year, with margin at 15.4% (-130bps).

• Free cash flow was £410 million; cash conversion at 80%.

• Net debt to EBITDA at year-end was 2.9x.

• Final dividend proposed at £5.93/share, full year £9.09/share, up 5% year-over-year.

• £172 million spent on bolt-on acquisitions; £229 million in dividends paid; 36 businesses acquired.

Outlook and guidance

• 2025 performance expected in line with market expectations despite soft Q1 lead generation.

• North America margins targeted to exceed 20% by 2027 post-integration; group margin target retired.

• 2025 guidance: restructuring costs ~$10m, one-offs (excl. Terminix) ~$15m, Terminix integration costs $55–65m.

• Capex: $300–310m; M&A spend: ~$250m; working capital outflow: $75–85m.

• Moving to dollar reporting from Q1 2025.