Rentokil first-quarter profit slumps

By Mark Potter

LONDON (Reuters) - Pest control to parcel delivery group Rentokil Initial (RTO.L) expects to slash its dividend this year after first-quarter profit more than halved, it said on Friday.

The services group, which has issued three profit warnings since December, announced a seven-point plan aimed at turning round its City Link parcels business, where the botched integration of acquisitions has hit results for the whole group.

However, new Chief Executive Alan Brown said it would take "an extended period of time" to revive City Link and that management problems there were apparent across the firm.

"In 2007, we bought about 200 businesses and the managerial capabilities to integrate those are just not there at the moment, so we're going to have to slow down our acquisition agenda," he told reporters on a conference call.

Rentokil, which offers a range of services to business and consumers including cleaning and the hire of uniforms and tropical plants, said adjusted profit before tax fell to 14.6 million pounds in the three months to March 31 from 35.4 million in the same period last year.

It also warned that it would have to cut its dividend payout this year from the 7.38 pence a share paid in 2007.

"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," Brown said.

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