LONDON (Reuters) - UK services firm Rentokil Initial Plc RTO.L is looking for more companies to buy as part of a strategy to beef up its presence in markets such as the United States and Brazil, after posting a 7.6 percent rise in operating profit in the first quarter.
The company, which offers services from pest control work wear supply, said was on track to generate a significant improvement in free cash flow for the remainder of the year after trimming 10 million pounds off its restructuring and operational costs.
Chief Executive Andy Ransom, who took over in October, said he would look for companies to buy in Rentokil’s key markets such as the United States, Australia, Britain and Latin America.
“We are really focused about where we want to do these deals. We’re not doing them everywhere, but where we think we can get good growth we’ve built acquisition pipelines and we’re constantly talking to people in the market,” he told Reuters in a phone interview.
“I think we should be able to see this M&A execution of ours continue for some time to come,” Ransom added.
Shares in Rentokil were up 2.4 percent at 121.6 pence by 0943 BST, making it one of the highest risers on the FTSE 250 index at that time.
“We believe Rentokil has now a much stronger platform to deliver increased shareholder returns,” said analyst Caroline de La Soujeole at brokerage Cantor Fitzgerald. “Whilst it is still early days, today’s statement shows that the company’s new strategy is yielding benefits.”
For the first quarter the company said adjusted operating profit was up 7.6 pct at 38.8 million pounds, while pre-tax profit was up an underlying 21.7 pct at 19.3 million.
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Editing by David Holmes