Rentokil falls on profit warning

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Shares in Rentokil Initial have tumbled 30%, after it cut its profits forecast for 2008 by £35m to £115m in light of difficult trading conditions.

The service company had forecast profits of £150m and this is its fourth profit warning since December.

The firm also blamed a slower than expected restructuring programme.

In May, it said problems at its City Link parcels delivery unit meant profits in the first three months of 2008 more than halved.

Rentokil shares closed 30.75 pence lower at 70.75p.

"We continue to experience operational problems in a number of our businesses, virtually all of which originate from poorly executed restructuring or acquisition integration programmes initiated between 2005 and 2007," said Alan Brown, the chief executive.

Problems linked to the restructuring of the UK washrooms business and the integration of washrooms and pest control acquisitions in Australia continued in the second quarter, he said.

The bulk of the problems are related to "serious operational issues in the UK" but its businesses in Europe are also facing cost or growth challenges, he added. "We expect these problems to continue for at least the remainder of the year," he added.

Mr Brown, previously ICI's finance chief, joined Rentokil earlier this year.