Rentokil eyes return to Libya as rats 'thrive' in war-torn country

Rentokil Initial is in talks with the Libyan government about resuming its rat-catching contract after a sharp increase in vermin in the country.

Rentokil said rats in Libya have 'thrived' after the company pulled out of Tripoli, Misrata and Benghazi last year because of the civil unrest Photo: AP

Alan Brown, chief executive, said rats in Libya have "thrived" after Rentokil pulled out of Tripoli, Misrata and Benghazi last year because of the civil unrest.

"I think we did a terrific job when we were there and they [the rats] were really unleashed on the population when we withdrew," he added. "It seems the authorities are keen to get us back."

Securing the Libya contract would be a welcome boost to the hygiene and rat-catching conglomerate after it warned losses at its troubled parcels division City Link widened in the first quarter of 2012

City Link's operating losses grew 19pc to £12.7m, dragging down Rentokil's overall performance.

Shares in the company fell 4pc on Friday as the losses at City Link meant Rentokil's pre-tax profits came in below expectations.

Christopher Bamberry, analyst at Peel Hunt, said: "We remain cautious on Rentokil, given its exposure to mature commoditised markets, the European headwinds it faces and challenges at City Link."

Rentokil's revenues increased 3.6pc while pre-tax profits rose from £5.4m in 2011 to £13.4m. However, the performance in 2011 was affected by problems in its Benelux business and a hit of about £5m from pulling out of rat-catching in Libya.

Mr Brown also claimed that City Link had improved its performance during the quarter as a new management team "gained traction". He added: "We expect a significant improvement in year-on-year financial performance in the second half."

However, the Olympics could cause disruptions to City Link this summer because of road closures in London.

Mr Brown said overall market conditions remain "challenging", particularly in southern Europe.

Rentokil shares fell 3.45 to 83.15p.

By Graham Ruddick from Telegraph