Rentokil(US:RTO)2021-03-04 22:40Financial Data and Key Metrics Changes - Revenue from ongoing operations increased by 6.3% at constant exchange rates, with ongoing operating profit growing by 5.4% despite challenges from the pandemic [2][12] - Free cash flow reached GBP 336.8 million, representing a cash conversion rate of 123% [3][12] - Net debt-to-EBITDA ratio improved to 1.6x at year-end, down from 1.8x in 2019 [13][37] Business Line Data and Key Metrics Changes - North America was the best-performing region, with ongoing revenue growth of 14.5%, driven by GBP 144 million from disinfection services and a 6.5% increase in pest services revenue [16][19] - Hygiene operations grew ongoing revenues by 36.8% and profits by 81.4%, largely due to the demand for hand sanitizers and disinfection services [54][53] - The Protect and Enhance segment saw ongoing revenues decline by 12% and profits by nearly 30% due to the pandemic's impact [64] Market Data and Key Metrics Changes - The European region experienced mixed impacts, with ongoing revenue rising by 2.5% overall, but a 3.2% reduction in France [26] - Asia region's ongoing revenue increased by 3.7%, supported by strong performances in Indonesia, Hong Kong, and South Korea, while India and Malaysia faced significant challenges [32] - The Pacific region's ongoing profit fell by 8.7%, despite strong demand for hygiene products [34] Company Strategy and Development Direction - The company aims to explore strategic opportunities in M&A, digital services, and the expansion of its Hygiene business, having launched in 20 new markets in 2020 [9][10] - The focus remains on enhancing digital capabilities and remote monitoring solutions to meet evolving customer needs [48][57] - The company is committed to achieving net zero emissions by 2040 as part of its environmental strategy [45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2021, anticipating further operational and financial progress despite ongoing pandemic uncertainties [10][39] - The company expects a gradual return to normal growth levels in Pest Control and a recovery in Hygiene services as markets reopen [23][70] - Management highlighted the importance of digital innovation and sustainability as key differentiators in the market [62][51] Other Important Information - The Board recommended a dividend payment of 5.41p for 2020, reflecting confidence in the company's performance [10][68] - The company completed 23 M&A deals in 2020, contributing to GBP 158 million in annualized revenues [66] Q&A Session Summary Question: Could you discuss organic growth excluding disinfection into Q4 and the outlook for 2021? - Management noted that organic growth was broadly correlated with the easing of lockdowns, with Q4 showing positive trends compared to Q3, but emphasized that detailed organic analysis was not particularly informative due to the pandemic's impact [75][76] Question: Clarification on the 3% to 4% organic growth outlook for 2021 and medium-term expectations? - Management clarified that the 3% to 4% growth guidance is a medium-term aspiration, with no downgrades elsewhere, and highlighted that Hygiene growth is expected to align more closely with Pest Control growth rates [78][79] Question: What was the revenue from the pest services business in 2020? - The core pest services revenue in 2020 was approximately $900 million, translating to about GBP 750 million [80]