Rentokil Drops US Margin Target After Soft Q2

Rentokil Initial, the parent of Terminix, reported first-half 2026 results on July 30 and told investors it is giving up on a key promise for its North American business. The company retired its target of a 20% North America margin in 2027, saying it would put money back into the region instead.

The market did not like it. AJ Bell reported that Rentokil shares sank 16% to 370.60 pence that day, making it the worst performer in the FTSE 100.

The headline numbers were not bad on their own. Group revenue for the half was $3,589 million, up 6.7% on a reported basis. North America revenue reached $2,197 million, with organic growth of 3.7%. But the core US pest control line grew more slowly. North America Pest Control Services posted organic growth of 2.6% for the half, slipping from 2.8% in the first quarter to 2.4% in the second. AJ Bell noted the second-quarter figure came in below the 3.0% midpoint of guidance.

According to the company’s report, residential revenue grew solidly through the half, but termite growth slowed in the second quarter, and commercial growth was slower, especially in national accounts. Rentokil also flagged weakness in residential lead flow toward the end of the second quarter that carried into July.

Chief executive Mike Duffy said reaching the company’s potential will take “disciplined reinvestment primarily back into the North America business.” The company said it now wants to favor volume growth over short-term margin gains.

Part of that plan is physical. Rentokil said it hit its 2026 target of opening 70 smaller local branches, aimed at areas with higher household incomes. It also reported $45 million in gross cost savings in the half, or $28 million after reinvestment, and continued to roll out its PestConnect connected device system in the US.

Rentokil’s update landed about a week after Rollins described a similar slowdown in residential leads. Taken together, the two largest players in US pest control are telling the same story: commercial and relationship-driven work is holding up, while consumer-driven residential demand got softer in late spring. Rentokil said it still expects full-year profit to land in line with market expectations.