# Rentokil Initial sees continued growth momentum in Pest Control and Hygiene & Wellbeing - Link: https://www.directorstalkinterviews.com/rentokil-initial-sees-continued-growth-momentum-in-pest-control-and-hygiene-wellbeing/4121061744 - Published: 2022-04-21T07:43:17+01:00 - Author: Amilia Stone **[Rentokil Initial PLC](https://www.directorstalkinterviews.com/ftse-company/rentokil-initial/rto.l)**( LON:RTO) has announced first quarter trading update. | **(£m) ** | | **Q1 2022 AER | Growth AER | Growth CER | | Ongoing Revenue | | 721.6 | 1.8% | 1.8% | | Revenue | | 722.0 | 1.8% | 1.8% | | Excluding disinfection | | | | | | Ongoing Revenue^(1) | | 713.4 | 12.2% | 12.3% | | Revenue  | | 713.9 | 12.1% | 12.2% | **Summary (at CER) **** ** | ● | Organic growth, excluding disinfection, of 8.0% (Ongoing Revenue +12.3%) | | ● | Input cost inflation entirely recovered by price increases | | ● | Terminix acquisition progressing well and remains on track to complete in the second half of 2022, with a target completion date towards the end of the third quarter | | ● | Business performing well and in line with our expectations | **Revenue growth ( ****at CER)** Pest Control delivered organic growth of 5.5% in Q1 (Ongoing Revenue +11.2%) with all regions in positive growth.   Ongoing Revenue in our Growth and Emerging markets grew by 10.9% and 13.6% respectively.  North America Pest Control, our largest pest control business, demonstrated further strong momentum, growing Ongoing Revenue by 11.2% (Organic +5.0%), driven by both residential and commercial revenue growth. Hygiene & Wellbeing, excluding disinfection, grew organically by 12.9% (Ongoing Revenue +14.2%), reflecting growth in all regions including Asia, despite the continued impact of the pandemic in a number of countries.  Trading conditions in our France Workwear business have continued to improve in Q1, resulting in organic growth of 14.7%.  Group Ongoing Revenue, excluding disinfection, grew by 12.3%; **8.0% organic^(2)** and 4.3% from acquisitions.  Including disinfection, Group organic growth was -2.0%. As highlighted in our Preliminary results in March, we are lapping strong disinfection revenues of £95.3m from H1 2021.  Disinfection revenues amounted to £8.2m in Q1, a decline of £64.5m on the prior year.  We reiterate our guidance for disinfection revenues for the full year 2022 to be within the range of £10m to £20m, vs. £116.0m last year.  **Pricing for inflation** Like all companies, we have experienced inflationary increases on our cost base in Q1, such as labour, fuel, consumables and paper.  As anticipated, we have continued to successfully mitigate the impact on margins of these via annual price increases( APIs), in line with normal practice.  Total price increases achieved in Q1 have entirely offset input cost inflation in the quarter and we remain confident that we will be able to continue to counter rising inflation through APIs during the course of the year.    **Operational progress** Customer retention in Q1 was robust at 85.3%, in line with full year 2021.  Colleague retention (on a rolling 12-month basis) was also strong, with Service Colleague retention at similar levels to the full year 2021 at 81.8%, and Sales Colleague retention improving slightly versus the previous year at 83.5%. **M&A** ​We acquired 11 businesses in Q1 – 10 in Pest Control and one in Hygiene & Wellbeing– in Chile, Colombia, Hong Kong, Poland, Malaysia, New Zealand and the US, with combined annualised revenues in the year prior to acquisition of c.£20m.  We continue to build on the strength of our attractive M&A pipeline of both Pest Control and Hygiene& Wellbeing opportunities,  and remain confident in our targeted spend of around £ 250m for 2022 _._ **Acquisition of Terminix Global Holdings, Inc. (Terminix)** We announced on 15 March that the applicable waiting period under the Hart-Scott- Rodino Antitrust Improvements Act of 1976 had expired, thereby completing the necessary antitrust process in the US.  A number of other conditions remain to be satisfied, including obtaining approval by the Company’s and Terminix’s shareholders, and the registration of the Company ADSs with the U.S. Securities and Exchange Commission and their listing on the New York Stock Exchange.  With good progress being made on satisfying the remaining conditions, both parties continue to be on track to complete the transaction in the second half of 2022, with a target completion date towards the end of the third quarter.   **Impact from geopolitical events** The Company has no operations in, or exposure to, Russia or Ukraine and has not been directly impacted by the war in Ukraine.  During the quarter, the Company donated £100,000 from the Rentokil Initial Cares charity fund to UNICEF, which is helping to provide critical services including water and sanitation, immunisation and healthcare, to children and families displaced across Ukraine and in neighbouring countries. **Outlook  ** The business is performing well and in line with our expectations resulting from organic growth delivery and the flow through of revenues from our M&A programme in 2021. Although we will lap strong disinfection revenues in H1 and will have to contend with ongoing macro-economic uncertainty, we continue to expect the Group to deliver good operational and financial progress in the coming year. > ​**Commenting on today’s announcement Andy Ransom, Rentokil Initial Chief Executive, > said:** > “I am very pleased with our performance in Q1, and the continued growth momentum > achieved in our core Pest Control and Hygiene & Wellbeing businesses.  We remain > confident in delivering further operational and financial progress in 2022. > “We are making excellent progress with the acquisition of Terminix. With the US > competition condition being satisfied in March, and with integration planning > progressing well, we are focused on completing the remaining conditions to closing > the deal and we remain on track to complete the transaction in the second half > of 2022, with a target completion date towards the end of the third quarter.”  Share on: