Rentokil Initial Shares Plummet 17% as North America Weakness Overshadows H1 Profit

Shares in Rentokil Initial (LON: RTO) crashed as much as 16.6% on Thursday, sliding to around 369.6p from Wednesday’s close of 443.3p.

The sell-off came despite the FTSE 100 company posting solid headline interim results: revenue rose 6.7% to $3.59bn, organic revenue growth hit 3.6%, and adjusted operating profit climbed 8.8% to $556m, with margins expanding 0.3 percentage points to 15.5%.

Free cash flow conversion reached 96%, and net debt-to-EBITDA fell to 2.4x — within target range for the first time since the Terminix acquisition.

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However, investors focused on warning signs in Rentokil’s crucial North America business. CEO Mike Duffy, four months into the role, flagged “weakness in North America Residential lead flow towards the end of Q2 and into July,” even as the group maintained full-year profit guidance in line with market expectations.

The company also scrapped its previous 20% North America margin target for 2027, opting instead to prioritise volume growth and reinvestment over near-term margin expansion.

An additional $47m provision for termite damage claims, taking the total provision to $392m, added to concerns, alongside continued softness in Commercial and National Accounts revenue growth in the US.

Duffy outlined a three-pronged turnaround strategy — customer focus, operational excellence, and business simplification — including new North America leadership under incoming president Rafa Carrasco. Markets, however, appear to be pricing in execution risk and a longer path to recovery than previously anticipated.