Rentokil Initial Q4 Profit Soars; To Sell Initial Facilities Unit - Quick Facts

(RTTNews) - Pest control firm Rentokil Initial Plc (RTOKY.PK, RTO.L) reported Friday a surge in fourth-quarter profit on lower items and higher revenues.

Separately, Rentokil Initial said that it has agreed the sale of its Initial Facilities business to Interserve Plc (IRV.L) for a total cash consideration of 250 million pounds. The company expects to close the deal by the end of March, subject to the agreement of Interserve's shareholders at a General Meeting on March 17.

The company expects to use the proceeds from the sale primarily to pay down debt.

For the fourth quarter, Rentokil Initial's pre-tax profit was 27.1 million pounds, significantly higher than last year's 2.8 million pounds.

Adjusted pre-tax profit, which excluded certain items, was 62.6 million pounds, compared to 62.9 million pounds a year ago. Operating profit declined 9.6 percent to 40.4 million pounds.

Revenue for the quarter increased 1.3 percent to 575.7 million pounds from 568.1 million pounds a year ago. At constant exchange rate, revenues increased 1.6 percent.

Further, the company said its Board is recommending a final dividend in respect of 2013 of 1.61 pence per share, which equates to a full year dividend of 2.31 pence per share, an increase of 10 percent compared to 2012.

Looking ahead, Chief Executive Officer Andy Ransom said, "Though we see no immediate improvement in trading conditions in Europe (particularly the Benelux) in 2014 we expect to offset ongoing margin pressure with cost efficiencies and anticipate a material improvement in free cash flow as restructuring expenses and capex are reduced."