MARKET REPORT: Royal Ratcatcher rises on US recovery hopes
Shares of British pest control giant Rentokil Initial soared as investors welcomed progress in the turnaround of its troubled North American business.
As well as reporting a steady 3.6 per cent increase in sales to £1.4 billion in the third quarter, the royal rat-catcher also announced a management overhaul of its operations across the Atlantic.
It also said it cut about 250 employees in North America because they overspent over the summer, anticipating an expected surge in demand that didn’t materialize.
Job cuts: Rentokil said it has cut about 250 employees in North America for overspending over the summer, in anticipation of an expected surge in demand that hasn’t materialized
Shares in Rentokil – which won pest control contracts at Buckingham Palace in the 1960s – rose 8.8 percent, or 29.9 cents, to 371 cents.
But the stock remains down about 20 percent since troubles in North America prompted a brutal profit warning last month.
And CEO Andy Ransom is under pressure from billionaire activist investor Nelson Peltz, who built his stake in the company through his firm Trian Partners and has a representative on the board.
“While today’s significant share price rise in pest control company Rentokil will come as sweet relief to shareholders who have weathered a difficult period, it is worth putting this move in context,” said Russ Mould, investment director at broker AJ Bell .
‘With a representative from Nelson Peltz’s Trian vehicle on the board, pressure on management is likely to remain acute. CEO Andy Ransom must deliver results.”
Rentokil was the biggest gainer in the FTSE 100 as the blue chip index rose 0.7 percent, or 56.06 points, to 8,385.13 and the FTSE 250 rose 0.6 percent, or 121.42 points, to 21,100 ,92.
Stock Watch – GB Group
Shares of identity verification company GB Group soared as investors cheered an upbeat set of results.
The software company, which helps businesses tackle fraud, said turnover rose 4.5 per cent to £137 million in the six months to the end of September.
First-half profits rose 21 percent to £29 million.
Chief executive Dev Dhiman said the “positive operational momentum we are carrying into the second half” supports confidence going forward.
Shares rose 13.1 percent, or 38p, to 327.2p.
The biggest faller in London’s top tier was paper and packaging group Mondi, which fell 7.5 percent (or 103.5p) to 1,286.5p after reporting a disappointing third quarter.
The company, which has more than 100 manufacturing sites in more than 30 countries, posted a 36 percent drop in profits for the period to £186 million, partly due to planned maintenance shutdowns.
The group said it expected an improvement in the fourth quarter, but this was not enough to stop the sell-off in share prices.
Shares in Tate & Lyle fell 3.6 percent, or 29 cents, to 778 cents as investors remained in the dark about a possible takeover.
The ingredients maker, which traces its roots back to 1859, rose almost 8 percent on Wednesday on reports that US private equity group Advent International planned to take a dip.
However, those hoping for concrete information or an update yesterday were left disappointed and sent shares lower.
Food orders from takeaway Deliveroo rose in the three months to the end of September, reflecting ‘healthy’ demand in Britain and Ireland.
The company said full-year profits are now on track to be in the ‘upper half’ of the £110 million to £130 million range as a result. The shares added 0.4 percent, or 0.6p, to 147.5p.
Defense group Chemring said it has “received a number of important orders” in recent months. Shares rose 4.6 percent, or 17p, to 383p.
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