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Rentokil Initial Withdraws FY20 Outlook Due To Covid-19; Plans Cost Cuts

Pest control firm Rentokil Initial Plc. (RTOKY.PK,RTO.L) Wednesday said it is withdrawing its fiscal 2020 guidance due to the impact of COVID-19 or Coronavirus.

At its previous trading update in February, the company had said the main impact from virus was on its operations in China.

In its latest update, the company said it now sees much more significant impact on its operations and performance in the second quarter and beyond.

The company noted that the outbreak escalated rapidly in the last 10 days impacting businesses around the globe in an unprecedented manner. The situation remains highly uncertain.

The company will update the market on its first quarter trading performance and further on the potential impact of the Coronavirus on April 16.

Regarding its trading, the company said Group trading to mid-March was not materially impacted by the virus outbreak. China trading was largely suspended in early February with a gradual return to service for 56% of customers at the end of that month and is now servicing around 75% of customers.

At mid-March, the main country impacted within the Group was Italy where business closures and a national lockdown had reduced service levels by around 40%.

As of now, COVID-19 has affected the majority of the key countries in its Group with many markets in advanced stages of lockdown.

Further, the company said that to mitigate the impact of revenue shortfalls, it has taken a number of cost saving measures to protect the profitability and cash generation of the business:

Pay cuts have been made across the Board and all senior management grades, with bonus schemes canceled and the 2020 LTIP grant postponed.

The various measures will reduce costs in 2020 by about 100 million pounds.

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