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Rentokil Initial’s acquisition-fuelled expansion helped profits jump almost a third in 2016, as the FTSE 250 pest control business prepares to ramp up spending further this year.
Revenues increased by 23 per cent, to £2.2bn, while pre-tax profits rose even faster, up 31 per cent to £209m. The figures were flattered by foreign exchange movements, but still increased by a healthy 12 per cent and 15 per cent respectively at constant exchange rates.
The company has been on an buying spree to help power its expansion into new markets, spending £107m on 41 smaller companies over the year. Rentokil said it plans to spend “at least £150m” on further acquisitions in 2017, up from previous estimates.
The purchases will be funded in part by the proceeds of its December deal with German rival Haniel to exit the workwear business, as it looks to further focus on its pest control and hygiene divisions.
Andy Ransom, Rentokil chief executive, said:
In 2016 we have continued to execute our strategy at pace. Our organic revenue growth of 3 per cent is at its highest level for 10 years with accelerated growth in pest control and hygiene showing continued performance momentum. In addition, we have exceeded our finanical targets.
Prospects in the majority of our markets are good and, while conditions in France remain difficult, we are confident of making further progress in the coming year.