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Rentokil Reports Loss As City Link Woes Continue

3/2/2012 3:28 AM ET

Pest control-to-carrier services provider Rentokil Initial Plc (RTO.L, RTOKY.PK) on Friday reported an annual loss as its City Link parcel service continued to disappoint. However, the company resumed dividend payments, with a final dividend of 1.33 pence, citing progress made across the rest of the group and continued strong operating cash flows.

Loss before tax was 50.5 million pounds compared to 14.5 million pounds last year. The company incurred one-off items, including reorganization costs, in both years and wrote down 146 million pounds related to City Link.

On the positive side, revenue and profit grew in its key Pest, Hygiene, Textiles and Facilities Services categories despite market challenges.

Alan Brown, the company's CEO, said, "I am particularly pleased with the rates of growth achieved toward the end of Q4, which have continued into the early part of 2012.

He also cautioned that "the investment in rollout of the Olympic sales growth initiatives is likely however to limit profit growth in these categories to mid single digits for the time being."

Loss attributable to equity holders of the company widened to 3.84 pence per share in 2011 from 1.29 pence per share.

Revenue edged up to 2.54 billion pounds from 2.5 billion pounds, with growth in all businesses except City Link where it dropped 8.5 percent from last year.

For the fourth quarter, pre-tax loss widened while revenue rose 2.5 percent at actual exchange rates. City Link's volumes grew 8 percent in the fourth quarter and revenue edged up 0.5 percent, but losses widened by 3.1 million pounds due to low productivity, driven in part by conservative resource planning for the Christmas period.

The financial performance of the business is expected to remain poor in the first half of 2012, but the company expects to see better results in the second half.

The stock is falling 3.85 pecrent on the LSE at 77.35 pence.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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