By George Glover

Investors are starting to wonder which sectors will suffer if the U.S. economy flatlines. Add pest control to the worry list.

Terminix owner Rentokil Initial said in a trading update that it would cut its fiscal 2024 sales outlook on Monday, flagging weakness over the past two months in the key North American market. It's now expecting second-half revenue growth of just 1% in the region, another revision downward after it slashed its guidance to growth of between 2% and 4% back in July.

Rentokil is based in Crawley in the U.K., and is listed in both London and New York. U.K. shares plunged 18% to 390 pounds ($511) on Wednesday, while its American depositary receipts cratered 17% to $26.10 ahead of the opening bell. As of Tuesday's close, the ADRs had fallen 12% for the year.

The pest-control giant also lowered its North American profit guidance by 20 million pounds ($26.2 billion), adding that it would aim to cut costs by managing its inventory, tweaking technician workload, and overtime, and adjusting its labor resource to reflect lower volume of demand.

Activist investor Nelson Peltz is one of Rentokil's 10 largest shareholders, with his firm Trian Partners revealing a "significant" stake in the company in June as it bids to turn the page on its defeat in a bruising proxy battle at Walt Disney.

Shares in fellow pest-control company Rollins tumbled 5.4% in premarket trading. Futures for the benchmark S&P 500 declined 0.3%.

Write to George Glover at george.glover@dowjones.com

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September 11, 2024 06:27 ET (10:27 GMT)

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