North American business growth boosts 2025 performance, Nuo Jie stock soars 12%

Investing.com - Rentokil Initial announced that its full-year revenue for 2025 was $6.91 billion. Its North American pest control services saw accelerated organic growth of 2.6% in the fourth quarter, reversing the negative growth in the first quarter and driving the company’s stock up 12%.

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North American pest control is the company’s largest business segment. Its organic growth shifted from -0.2% in the first quarter to 2.6% in the fourth quarter, surpassing analyst expectations of around 2%. The group’s full-year organic revenue growth was 2.6%, slightly above the market consensus of 2.3%.

Adjusted operating profit increased by 5.4% to $1.07 billion, with profit margins expanding to 15.5%. Free cash flow surged 24.5% to $615 million, with a conversion rate of 98%, exceeding company guidance. Net debt to adjusted EBITDA ratio decreased from 2.9x to 2.6x.

Outgoing CEO Andy Ransom stated in a release: “2025 has been an encouraging year, with performance improving in the second half after we began implementing strategic initiatives in Q1 2025.”

North American adjusted operating profit margin rose 30 basis points to 17.4%. International business revenue reached $2.61 billion, growing 4.8% at constant currency, with an adjusted operating profit margin of 19.8%.

In 2025, Rentokil increased its provision for termite damage by $201 million. After settling claims worth $95 million in cash during the year, the year-end balance reached $384 million.

Lawsuit claim rates increased by 75% year-over-year, with the cost per claim rising approximately 48%. The company has raised the long-term inflation assumption in its reserve model from 2% to 3%. It expects cash outflows from reserves between $85 million and $95 million in 2026.

After three years of acquiring Terminix, Rentokil announced it will retain about 30 brands, which account for over 90% of North American revenue, abandoning earlier plans to consolidate around two national brands.

The company will not complete a full IT migration but will maintain two existing ERP systems and build a unified business intelligence layer on top.

Rentokil reaffirmed its goal to cut $100 million in costs relative to inflation-adjusted 2024 baseline by 2027, with $25 million already achieved in 2025. It also plans to increase North American adjusted operating profit margin to over 20% by 2027. Morgan Stanley noted that the market generally expects an 18.8% profit margin in North America for that year.

Rentokil stated that despite weather disruptions in January, it expects 2026 performance to meet market expectations. Market consensus compiled by the company projects revenue of $7.21 billion and an adjusted EBITA of $1.16 billion in 2026.

The board recommended a final dividend of $0.0824 per share, bringing the total annual dividend to $0.1239, a 3% increase.

Mike Duffy, who joined the company as designated CEO on February 16, will officially succeed Ransom after the annual shareholders’ meeting. Ransom served as CEO for 13 years.

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