Rentokil's turnaround hampered by turmoil

There's little sign of relief at rat-catcher Rentokil, where profits have tumbled 72%.

Third-quarter results offer little hope to investors, who have seen the shares sink from 160p a year ago to just 48¾p, up 2p, today. The firm made just £16.6 million in the three months to the end of September.

Chief executive Alan Brown said: "The deteriorating economic backdrop makes it particularly difficult to predict future trading conditions."

Rentokil is less than a year into a five-year turnaround plan it admits has been hampered by the tough economy. It has issued four profit warnings this year.

Rentokil kept revenue steady at £562 million but parcel-delivery service City Link remains loss-making.

There have been concerns that the company, which has debts of more than £1 billion, may breach banking covenants. But Brown today moved to reassure the City by shaking up its finances, raising £125 million of five-year money.

The former ICI finance chief, parachuted in last March, has not ruled out a rights issue to raise more cash. Rentokil has already slashed to dividend, saving itself about £100 million a year.

Brown's predecessor Doug Flynn was ousted once it became clear the merger of City Link with newly acquired Target Express was botched. The washroom arm is also troubled.