British services group Rentokil Initial posted a 6.7 per cent fall in first-half pretax profit this morning but said it expected to return to modest growth in 2007.
Rentokil, whose businesses range from rat-catching to cleaning linen, said pretax profit from continuing operations for the six months to end-June was £112.1 million sterling (€165.9 million) as revenue grew 10.5 per cent to £1.01 billion.
Chief Executive Doug Flynn said the group had reduced full-year expectations in its textiles and washroom services division due to trading conditions, but that other divisions would show improving profit trends during the second half.
Shares in Rentokil, which have underperformed the UK support services sector by 10 per cent over the last 12 months, closed at 159-3/4 pence yesterday, valuing the group at around £2.9 billion.
Analysts said changes in the company, such as the sale of its guarding businesses, had made forecasting the results difficult and there was no clear consensus.
Rentokil said adjusted second-quarter profit before tax, one-off items and amortisation had risen 3 per cent as previous initiatives began to take effect.
After fending off an attempt by Donegal-born businessman Gerry Robinson to install himself as executive chairman and return cash to shareholders last year, Rentokil embarked on a new strategy.
It offloaded its UK and Canadian guarding businesses in March for £74.8 million and £30 million respectively and sold its Belgian equivalent for £6.1 million in April. It also offloaded its Initial Style Conferences businesses in November for £325 million.
In June, the group said it had sold its US security guard division to Allied Security Holdings for $73.6 million, completing the group's exit from the guarding market, and closed the UK linen and workwear business in April.