Rentokil shares tumble on warning

Rentokil has reshaped its business

Shares in Rentokil have tumbled as it warned that fourth-quarter profits may miss targets by as much as £10m.

Weaker consumer spending has hit its delivery service City Link, which has not been as busy ahead of Christmas as had been expected, the firm said.

Shares in services company fell 22% to 114.3 pence in London.

Rentokil is best-known for pest control, but also controls businesses involved in package delivery and interior landscaping.

A slowing economy may impact other parts of the group Panmure Gordon Rentokil's share price

"The anticipated surge in volumes seen in prior years in the business-to-consumer segment in the run-up to Christmas has been later and less than expected," the company said.

This is the result of "weaker consumer spending in a challenging retail environment," it added.

City Link had seen strong growth in the three months to the end of September, and during November.

As a result, Rentokil said its forecast for 2007 profits was broadly in line with last year's, though some observers questioned this.

"Management are maintaining their guidance for 2008 but with some economic pressure and a worsening background, this must now look questionable," UBS analysts said.

Some analysts have now downgraded the stock.

"We believe a slowing economy may impact other parts of the group in 2008," Panmure Gordon analysts said in a note.