News on 1 September 2000

Rentokil Initial is creating a new facilities management division which will be headed by director Stephen Fretwell. The FM operation will develop multi-servicing - a range of services sold to a single customer including cleaning, catering, hospital and management services.

The facilities management business experienced a fall in turnover by 6.2% to £227m due to the termination of a number of large, low margin contracts in the second half of last year. Profits were reduced by 29.7% to £18m. The company says it introduced a more flexible approach to contract pricing last year and this method is proving better at retaining customers. In future the company will report on its core business by specialised services and by facilities management.

Rentokil announced pre-tax profits down from £253m to £207.5m in the first half year ending June 30. The sales and marketing investments in the first half should however pay back in the second half with higher growth.

Corporate restructuring will see the company dispose of cyclical businesses, which account for a third of the company’s sales and a fifth of its profits, to concentrate on its core areas of hygiene services, property services, security, parcels delivery and pest control. The latter’s turnover rose by 5.6% to £95.4m.

Rentokil is also looking at acquisitions and made a £30m purchase of a US tropical plant service company on Wednesday.

Jessica Jarlvi