Rentokil shares at 10-year low after fourth profit warning

Rentokil Initial, the pest control-to-washroom services group, has issued its fourth profit warning since December.

Following the news, shares in the company plummeted 30% this morning to a decade-low of 70.5p.

The company has slashed its profits forecast for 2008 from £150 million to £115 million due to difficult trading conditions and a slower than expected restructuring programme.

Newly appointed chief executive, Alan Brown, said the majority of the problems relate to operational issues in several of its businesses, primarily due to poorly executed restructuring or acquisition integration programmes initiated between 2005 and 2007.

The problems are expected to continue for the rest of the year, added Mr Brown.

The company announced in May that difficulties at its City Link parcels delivery unit meant profits in the first quarter of this year more than halved. The problems continued after the company was demoted from the FTSE 100 in March.

Alan Brown, who is former chief financial officer at Imperial Chemical Industries (ICI), went on to say that he believes the correct agenda is being executed at Rentokil and the company has significant potential over the medium to long-term.

Story link: Rentokil shares at 10-year low after fourth profit warning