FTSE 100 movers: Rentokil slumps on profit warning; AB Foods gains

11th Sep 2024 13:55

(Sharecast News) - London's FTSE 100 was up 0.1% at 8,213.99 in afternoon trade on Wednesday.

Associated British Foods gained as the Primark owner announced an extension of its share repurchase programme, with an additional £100m allocated for the buyback.

The company said the extended programme would run until 15 November.

Rentokil Initial tumbled as the pest control firm scaled back its profit guidance for the full year after weaker-than-expected summer trading in North America.

The company, which had already reduced profit targets in July due to additional investments in the second half, said that revised growth expectations and higher costs mean adjusted operating profits would be £50m lower than current expectations.

As such, Rentokil is now guiding to an adjusted profit before tax and amortisation of £700m for 2024, down from £766m last year.

Russ Mould, investment director at AJ Bell, said: "While its business in the rest of the world is getting on OK, the company is struggling in North America.

"Weaker than expected revenue has been compounded by problems of the company's own making such as insufficient control of costs hitting profitability.

"It seems in its desperation to boost revenue during the peak season, the company had too many staff. It also shelled out on overtime as it looked to boost business by increasing weekend working. This lack of discipline doesn't reflect well on the group, with measures to 'right-size' its workforce amounting to closing the stable door after the horse has bolted.

"Investors who were sold the merits of the company's big Terminix acquisition in the US may now be smelling a rat. The company was widely perceived to have paid a high price at the time and bringing the business fully into the fold is proving a difficult challenge.

"Today's news will provide further ammunition for activist Nelson Peltz, who joined the shareholder register in June. Current management will be shifting nervously in their seats, with the pressure to take dramatic action, including moving its primary listing to the US, only likely to increase."

FTSE 100 - Risers

Intermediate Capital Group (ICG) 2,162.00p 2.76%

Entain (ENT) 695.60p 2.44%

Prudential (PRU) 613.20p 1.96%

BT Group (BT.A) 142.45p 1.71%

Rio Tinto (RIO) 4,628.00p 1.47%

BP (BP.) 402.20p 1.20%

Standard Chartered (STAN) 758.60p 1.17%

Associated British Foods (ABF) 2,188.00p 1.16%

Antofagasta (ANTO) 1,681.00p 1.05%

Melrose Industries (MRO) 463.00p 0.98%

FTSE 100 - Fallers

Rentokil Initial (RTO) 383.10p -19.43%

Berkeley Group Holdings (The) (BKG) 4,868.50p -2.19%

Persimmon (PSN) 1,578.00p -1.99%

Centrica (CNA) 117.20p -1.92%

Smurfit Westrock (DI) (SWR) 3,279.00p -1.89%

Barratt Developments (BDEV) 488.50p -1.81%

LondonMetric Property (LMP) 203.40p -1.74%

JD Sports Fashion (JD.) 138.10p -1.71%

Taylor Wimpey (TW.) 158.15p -1.65%

Frasers Group (FRAS) 813.00p -1.57%