By (Reuters) -Rentokil Initial warned of lower annual profit on Wednesday after weaker than expected sales in its largest market North America, sending shares of the British pest control company as much as 20% lower.
This is the third warning about weakness in its North America business in the past year.
The shares, which have lost about a third of their value since the first North America warning in October last year, were down 20% to 380 pence at 0800 GMT. The stock was the biggest loser on the FTSE 100 index.
The company, which made approximately 60% of its revenue in North America last year, said it would cut jobs but did not specify how many. It said that was needed to address cost overruns as it moved past the peak season.
Rentokil said full-year adjusted pretax profit was now expected to be about 700 million pounds ($916 million), versus the 766 million pounds it reported last year.
Analysts at RBC Capital Markets had expected pretax profit of about 777 million pounds.
North America sales in July and August came in lower than anticipated and the company now expects organic revenue growth from the business of about 1% in the second half.
“(The profit warning) will raise further questions on management control and visibility in the region,” Jefferies’ analyst Allen Wells said in a note.
Rentokil and rival Rollins (NYSE:ROL) account for roughly half of the U.S. pest control market.
Activist investor Nelson Peltz’s Trian Fund Management has built a stake in the company and said in June it was interested in discussing “ideas and initiatives”.
($1 = 0.7642 pounds)
