Rentokil underlying profit up 81.5 pct

LONDON (Reuters) - Pest control to parcel delivery firm Rentokil Initial posted an 81.5 percent increase in third-quarter profit and said it expected further improvement in the balance of the year. "We anticipate a further quarter of good delivery in Q4 despite few signs of economic recovery in our major markets," said Chief Executive Alan Brown.

The support services company, which issued a string of profit warnings in 2007 and 2008, said on Friday its profit before tax and one-off items at constant exchange rates was 49.6 million pounds in the three months to September 30.

Revenue fell 3.2 percent at constant currencies to 622.6 million pounds, the same percentage fall as the second quarter, in trading conditions the firm said were "challenging."

Advertisement starts

Advertisement ends

Rentokil, whose businesses also include cleaning and the hiring out of uniforms and tropical plants, said its operating cash flow increased 165.8 percent to 104.2 million pounds.

The firm forecast its City Link parcel delivery business would make a full year operating loss of 7 million pounds, better than previous guidance of a loss of 12 million pounds. But it said the benefit from the UK postal strike was expected to be minimal.

Shares in Rentokil have more than doubled over the last year outperforming the DJ Stoxx European industrial goods and services sector index <.SXNP> by 65 percent.

The stock closed Thursday at 108.8 pence, valuing the business at 1.97 billion pounds.

(Reporting by James Davey, editing by Sharon Lindores)

2009 Reuters Click for restrictions