Rentokil Initial PLC (LSE:RTO) shares fell almost 17% on Thursday after the pest control specialist warned of softer demand in its North American residential business, overshadowing second-quarter earnings and revenue that came in ahead of market expectations.
By late morning in London, the stock was down 17.1% at 367.5 pence, making it one of the weakest performers on the FTSE 100 and marking its lowest level since September 29, 2025.
Second-Quarter Results Exceed Expectations
Rentokil reported adjusted profit before tax of $459 million for the second quarter, comfortably ahead of the S&P Global Visible Alpha consensus forecast of $442.7 million. Revenue increased 6.7% year over year to $3.59 billion, also surpassing analyst expectations of $3.56 billion.
The stronger earnings performance was supported by improved margins across the pest control business, particularly in North America, where profitability increased despite slower sales growth.
Slowing U.S. Residential Demand Raises Concerns
Despite the earnings beat, investors focused on signs of weakening demand in Rentokil’s largest market. Organic growth in the North American pest control business slowed to 2.4% during the second quarter, down from 2.8% in the first quarter.
Management also warned of “some weakness in North America residential lead flow towards the end of Q2 and into July.”
The comments mirrored recent caution from U.S. competitor Rollins and prompted concerns that growth could weaken further during the second half of the year.
Full-Year Guidance Maintained
Despite softer residential demand in North America, Rentokil reaffirmed its expectation that full-year results will be in line with current market forecasts, indicating that stronger performance in other parts of the business should help offset weakness in the U.S. residential segment.
Current market expectations point to full-year revenue of approximately $7.3 billion, adjusted profit before tax of $972 million and an adjusted EBITA margin of 16.3%.
Analysts at Jefferies described the quarterly results as encouraging but said investors are likely to remain focused on the outlook for U.S. pest control demand, which could continue to weigh on sentiment even after the stronger-than-expected earnings performance.
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