Rentokil CEO sees "substantial cut" to dividend

LONDON, May 2 (Reuters) - British services conglomerate Rentokil (RTO.L: Quote, Profile, Research) said on Friday it was likely to make a "substantial cut" to its dividend payout this year.

"If one looks at the earnings outlook and one looks at the average dividend payout for the sector, I would have thought that it is going to be a substantial cut," new Chief Executive Alan Brown told reporters on a conference call.

Earlier, Rentokil posted a big fall in first-quarter profit and said it would not be able to match the dividend of 7.38 pence a share paid in 2007.

Brown said Rentokil's dividend yield based on the 2007 payout was about 8 percent, compared with a sector average of about 3 percent.

He added that the first-quarter operating loss of 15.5 million pounds ($30.8 million) at the firm's troubled City Link parcels business was likely to be a low point, but that it would take "an extended period of time" to turn the unit around. (Reporting by Mark Potter, Editing by Chris Wills)