Rentokil eyes expansion in Africa to meet new hygiene demands post coronavirus

The company aims to Lagos, Abuja, Accra and Addis Ababa as a priority city for expansion, Salomon said.

  • Rentokil typically expands through acquisitions, buying local companies and then upgrading their operating standards to meet its global standards.
  • Conversations with potential partners in the target cities go from the initial stage to more advanced ones. The company plans to “move quickly after the virus is over,” Solomon said. “We have a growth strategy in Africa.”

Rentokil operates in South Africa, Kenya, Uganda, Mozambique, Mauritius and Tanzania. Shares traded in London have fallen with the rest of the market due to the economic standstill caused by the coronavirus.

Rentokil on March 25 withdrew full-year 2020 guidance and suspended dividend payments as the pandemic worsened.

He has gone to that company save money. Management has taken pay cuts, canceled bonus schemes and imposed a hiring freeze. These and other steps are expected to cut costs by around £100m in 2020, the company says.

  • In Africa, Rentokil is facing “a very difficult time” in the short term as many of its clients’ businesses have been forced to close, Solomon said. “Our customers can’t make it work.”

READ MORE: African Development Bank picks Citi for US dollar coronavirus bond sale

Disinfection

In South Africa, Rentokil has been classified as an essential service and is therefore allowed to remain open. Salomon said he hopes other countries, such as Kenya and Mozambique, will take the same stance.

He has been encouraged by the response to the crisis by the governments of South Africa, Kenya and Mozambique, which has been “generally swift and productive”.

Prevention, he says, is essential because the South African health system will not be able to handle many cases.

Disinfection is likely to become a larger part of Rentokil’s business in Africa once the pandemic is over, he says, although the change is difficult to quantify. “Demand will increase after the lockdown.” Hand washing products will also have a permanent increase; Even in shopping malls, people will want to wash their hands more, he says.

In the future, “there will be more hygiene awareness,” he says, and government hygiene regulations and enforcement will be stricter. Demand for hygiene and disinfection services will be greatest in Africa’s urban areas, which have the best chance of contamination in an epidemic, he said. “It’s not rocket science. We see a positive long-term story.”

READ MORE: South African corporations to fight coronavirus

Bottom line

If it has to weather the short-term financial storm, Rentokil will benefit from a greater awareness of hygiene.

Leave a Comment