No quick fix, Rentokil warns

RENTOKIL'S new chief executive, Doug Flynn, today warned the City he would not be 'stampeded' into making any quick sell-offs, as the troubled security services to pest control company revealed there were few signs of a much-needed turnaround in the business.

A trading statement showed that underlying profits in the four months to 30 April plunged 16.5%, with tough market conditions and the much higher levels of investment being poured into sales and marketing by chairman Brian McGowan affecting the group. Annual profits, as warned, will be below last year's level.

Flynn, who joined from Aegis in April, has come under pressure from fund managers and analysts desperate to know how he plans to revive the business and what parts of the sprawling empire he may sell off. Many are pushing for the disposal of its parcels delivery or tropical plants divisions.

He insisted that while 'everyone under the sun' was trying to give him advice, he would act only when the time was right. Flynn said: 'We are not going to be stampeded into a grand pronouncement. As and when we need to take decisions, we will. We need to fix the business and work out how we do that.'

The Rentokil boss added that he was not willing to pacify analysts pushing for change by setting timelines on when his strategy would be laid out and when divestments may come. 'They may want to know but I can't think of anything more disruptive to a business,' he said. 'This is not a company in trouble, but one that needs to perform better.'

McGowan hired Flynn after a tumultuous nine months that saw him oust veteran chairman Sir Clive Thompson in a bloody boardroom coup, and then axe chief executive James Wilde after a shareholder revolt at last year's annual general meeting over his performance.

McGowan, who has put £35m on to costs, today insisted the benefits of the programme should start to come through 'progressively' as the second half unfolds. There were few of his promised 'green shoots' in the trading statement, with operating profits in hygiene down 11.3% and in pest control by 10.9%.

But McGowan added that Rentokil had gained £38m of new contracts, and said: 'If you want to be an optimist, you can see green shoots. If you want to be a pessimist, you can be that as well.'