(Adds CEO comments on M&A, analyst comment, background)
By Li-mei Hoang
LONDON, Aug 1 (Reuters) - British services firm Rentokil Initial said it was looking to buy more businesses in Asia and Latin America, after reporting a 7.7 percent rise in half year operating profit.
Chief Executive Andy Ransom, who took over the role in October last year, told Reuters that he planned to spend up to 80 million pounds on acquisitions this year to boost its core businesses of pest control, hygiene and work wear.
“We’ve got a really full M&A pipeline, lots and lots of exciting opportunities ...I’d say we’ve got more opportunities in Asia this time around than we did (six months ago),” said Ransom.
“America is still a big area of focus for us, and we’re also hoping to pick up some more deals in Latin America to bulk out the businesses that we bought down there,” he added.
The company has undergone a major restructuring programme to improve its performance, disposing of its facilities management arm in February and its parcels delivery business last year.
Rentokil, which operates in more than 60 countries, said operating profit in the first half of the year rose to 100.2 million pounds ($169 million) at constant currency rates.
It also reported 55.5 percent rise in profit before tax, to 66.8 million pounds, and raised its interim dividend by 10 percent to 0.77 pence.
But due to the continued strengthening of sterling, Rentokil said it estimated the impact of currency movements on the full year to be around 17 million pounds, up 3 million from its previous guidance.
“Rentokil’s interim results demonstrate good progress since the February strategic review with the group on track to meet cash and cost targets,” Barclays analyst Jane Sparrow said.
“Despite an additional 3 million pound FX headwind, we leave our full year forecasts unchanged,” she said. Barclays has an “overweight” recommendation on the stock.
Shares in Rentokil were down 0.8 percent at 117.6 pence by 0758 GMT. ($1 = 0.5925 British Pounds) (Reporting by Li-mei Hoang; editing by James Davey and Jane Merriman)