Rentokil sales jump as pest control demand resurges; disinfection boost to ebb

(Reuters) -Rentokil Initial said on Thursday demand for its disinfection services, which helped first-quarter sales grow, is expected to unwind in the year, while its core offering of pest control treatments have returned to organic growth.

The company's ongoing revenue for the three months to March jumped 15.4% to 711.3 million pounds ($991.05 million) at constant exchange rates.

That was much higher than pre-pandemic sales of 603.6 million pounds in the first quarter of 2019.

The provider of hand soaps, sanitizers and deep-cleaning services to businesses expanded its hygiene category into more countries last year to adapt to demands due to the coronavirus crisis, which also hurt its core pest control services.

However, as immunisations are carried worldwide and restrictions are eased in the United States and Britain, the lift from sanitisation contracts is ebbing, while Rentokil's core business of pest control services is coming back up.

"The ongoing COVID-19 pandemic presents obvious and continued uncertainty ... Notwithstanding this, we continue to expect 2021 to be a year of transition with our core services building momentum," the company, more than 100 years old, said.

Ongoing revenue at Rentokil's hygiene business surged nearly 50%. However, sales from disinfection contracts were down by roughly a quarter, compared with the previous quarter.

The company's biggest market, North America, also saw sales jump 39.4% as COVID-19 curbs eased. Operating in around 80 countries, Rentokil's services to hotels, restaurants, schools and the airline industry were stalled by virus-led lockdowns.

($1 = 0.7177 pounds)

(Reporting by Pushkala Aripaka in Bengaluru; editing by Uttaresh.V)