Rentokil Initial : curbs spending, withdraws targets due to coronavirus

Pest control company Rentokil Initial said on Wednesday it was clamping down on spending to deal with the collapse of some business during the coronavirus crisis and withdrew its 2020 forecast.

Rentokil shares slumped 20% to 305.47 pence by 0816 GMT.

The company, which said 75% of its business in China was now back on line, said it expects global standards for hygiene to increase significantly and will have at least 2,500 additional technicians trained in disinfection services by the end of March.

Rentokil's hygiene business operates across 46 markets - providing hand soaps, sanitizers and also deep cleaning services - and made up a little over one-fifth of earnings in the last fiscal year.

Like most companies trying to shore up their finances to battle the hit from coronavirus-related disruptions, Rentokil suspended its M&A plans and dividend payments for the time being, conserving over 500 million pounds of cash in the year.

It now expects capex to reduce by at least 75 million pounds in 2020 to below 200 million pounds.

"While we had made a good start to the year, the ongoing uncertainty and turmoil presented by the COVID-19 outbreak will mean we will have a difficult second quarter and potentially beyond," Rentokil said.

The company estimates that if the situation stands as is, there will only be a small net impact on the business in the quarter, but if it worsens that would have a more negative hit during the rest of the year.

(Reporting by Muvija M in Bengaluru; Editing by Patrick Graham, Bernard Orr)