Rentokil(US:RTO)2025-03-26 10:10Revenue Performance - Revenue for 2024 was £5,436 million, a 1.1% increase from £5,375 million in 2023[4] - Group Revenue increased by 3.9% to £5,587m, with Organic Revenue growth of 2.8%[23] - International revenue grew by 5.1% to £2,165 million in 2024, with adjusted operating profit increasing by 2.9% to £420 million[63] - North America Organic Revenue growth was 1.5%, while International business saw a growth of 4.7%[11] - Organic Revenue Growth for 2024 at constant exchange rates (CER) is £150 million, with a growth percentage of 2.8%[114] - North America segment revenue was £3,260 million in 2024, a decrease from £3,306 million in 2023[186] - Pest Control category Revenue grew by 2.9% to £4,408m, primarily driven by price increases[24] - Hygiene & Wellbeing Revenue increased by 8.4% to £931m, supported by strong demand for washroom services[24] Profitability - Adjusted Operating Profit decreased by 4.2% to £860 million in 2024 from £898 million in 2023[6] - Adjusted Operating Profit decreased by 4.2% to £860m, resulting in a Group Adjusted Operating Margin of 15.4%, down 130bps year on year[26] - Operating profit for 2024 decreased to £549 million from £625 million in 2023, reflecting a decline of 12.16%[130] - Adjusted Profit Before Tax for 2024 was £703 million, down from £766 million in 2023, a decline of 8.22%[149] - Basic Adjusted Earnings Per Share for 2024 was 21.25p, compared to 23.19p in 2023, a decrease of 8.38%[139] - Adjusted Operating Profit for Hygiene & Wellbeing rose by 6.8% to £169m, while the Adjusted Operating Margin decreased by 30bps to 18.1%[78] Cash Flow and Dividends - Free Cash Flow for 2024 was £410 million, down 18.0% from £500 million in 2023[6] - The company paid dividends of £229 million to equity shareholders in 2024, an increase from £201 million in 2023[161] - Recommended final dividend for FY 2024 is 9.09p per share, reflecting a 4.7% year-on-year increase[11] - Adjusted Free Cash Flow Conversion for 2024 was 80.0%, down from 89.4% in 2023, indicating a decrease in cash conversion efficiency[146] Acquisitions and Integration - The integration of Terminix is on track for completion by the end of 2026, with significant milestones achieved[8] - The company acquired 36 businesses with revenues of approximately £140 million for £182 million, indicating a strong pipeline for future acquisitions[15] - The company acquired 13 businesses in North America with combined revenues of approximately £69m[37] - The company completed 12 business acquisitions in Europe and LATAM, with revenues of £20 million in the year prior to purchase[66] - A total of 36 new businesses were acquired, including 24 in Pest Control and 12 in Hygiene & Wellbeing, for a total consideration of £182m[82] Cost Management - The company expects to generate $100 million in cost reductions post-integration compared to 2024 levels[15] - Cost synergies were achieved in 2024, with a projected $100 million reduction in operational costs post-2026, aligning with initial gross synergy expectations[58][59] - Central and regional overheads increased by £17m to £138m, primarily due to inflationary increases and IT investments[89] Customer Metrics - Customer retention in North America improved to 80.1%, up from 79.5% in FY 23[36] - Customer retention rates remained strong, with North America at 88.3% and Asia & MENAT at 80.7% for the full year[65][72] Future Outlook - The company anticipates FY 2025 financial performance to align with market expectations despite challenges in lead generation[15] - The adjusted free cash flow conversion forecast for FY 2025 is 80%, with modest balance sheet deleveraging expected[15] - The North America business is expected to achieve operating profit margins above 20% from 2027, retiring the previous margin target of greater than 19% by 2026[59] Financial Position - The net debt to EBITDA ratio was 2.9x as of 31 December 2024, compared to 2.8x at the end of 2023[96] - Cash and cash equivalents decreased to £925 million in 2024 from £1,562 million in 2023, a decline of 40.73%[155] - Total equity at 31 December 2024 was £4,228 million, up from £4,088 million in 2023, representing an increase of 3.43%[161] - The company recognized contract costs of £238 million at the end of the period, an increase from £224 million in 2023[179] Taxation - The effective tax rate for the period was 24.2%, up from 22.7% in the previous year[93] - Current tax expense for 2024 is £89 million, down from £94 million in 2023, while total income tax expense decreased to £98 million from £112 million[194] - The Group had tax losses of £242 million as of the balance sheet date, with £203 million set to expire between 2025 and 2045[200]