Image source: © 2025 Krish Capital Pty. Ltd.

Highlights

  • RTO’s group adjusted operating profit declined 4.5% YoY to USD 511 million in H1 2025
  • Pest Control revenue grew 2.9% YoY to USD 2.79 billion, supported by 3.8% organic growth internationally
  • Free cash flow rose to USD 282 million, USD 67 million higher than H1 2024 due to improved working capital

Rentokil Initial plc (LSE:RTO) reported revenue of USD 3.36 billion for the half year ended 30 June 2025, marking a 3.1% increase over the prior period, with organic revenue up 1.6%. The company’s Pest Control division contributed USD 2.79 billion, a 2.9% rise, with organic revenue growth of 1.8% driven primarily by performance in the international segment. Hygiene & Wellbeing revenue increased 4.3% to USD 566 million, while North America revenue rose 2.0% overall and 1.1% organically.

Adjusted operating profit declined by 4.5% to USD 511 million, reflecting lower volumes and reduced profitability in North America, which offset improvements in the international segment. Adjusted operating margin for the group fell by 120 basis points to 15.2%. Profitability within Pest Control fell from 19.2% to 18.0%, while Hygiene & Wellbeing maintained a stable margin of 17.2%.

Adjusted profit before tax was USD 418 million, down 7.8% year over year. Statutory operating profit was USD 304 million, compared to USD 380 million in the previous period. A key driver of this decline was a USD 79 million increase in the provision for termite damage claims, which contributed to one-off and adjusting items totaling USD 110 million for the period.

Free cash flow for H1 2025 was USD 282 million, up from USD 215 million in H1 2024, helped by a USD 64 million improvement in working capital outflows. Operating cash flow reached USD 412 million, while capital expenditure remained flat at USD 89 million. Cash interest payments declined by USD 25 million to USD 106 million, and cash tax payments rose by USD 7 million to USD 43 million. Adjusted free cash flow conversion reached 93%.

In North America, adjusted operating profit fell 7.3% to USD 356 million, with adjusted operating margin at 16.9%. The region saw revenue of USD 400 million in its Business Services segment, with 5.8% organic growth. The company noted improvements in residential lead flow since April and increased technician participation in its lead program. Customer retention improved from 79.8% to 80.5%, while North American staff retention rose to 80.7%.

Eight bolt-on acquisitions were completed in North America during the period, contributing approximately USD 18 million in trailing revenue. The company continues to target further M&A opportunities and cost efficiencies. Rentokil confirmed that its integration-related cost reduction target of USD 100 million and North American margin goal above 20% beyond 2026 remain unchanged. The provision for termite warranty obligations increased from USD 236 million to USD 276 million as of 30 June 2025.

Rentokil Initial shares were trading 6.12% higher at GBX 367.80 per share as of 31 July 2025.