UPDATE 2-Rentokil Q3 profit down 72 pct

* Q3 pretax profit down 72 pct to 16.6 mln pounds

* Worsening economic condition beginning to hit sales

* Shares up 7 percent by 0815 GMT

* Leaves guidance unchanged

(Adds company comment, shares, background, detail)

By Rhys Jones

Nov 7 (Reuters) - British services group Rentokil Initial on Friday posted a 72 percent fall in third-quarter profit and said the worsening economy was beginning to impact sales and could hamper its turnaround plans in 2009.

Chief Executive Alan Brown told reporters on a conference call that he doubted "the tough economic conditions would affect the turnaround long-term but... will probably slow the performance at the top line in 2009, but sometimes in tough market conditions you can move more quickly," said Brown.

Rentokil, whose businesses range from rat catching to tropical plant hire is still suffering from the poor integration of acquisitions and misguided cost-cutting plans by previous management.

The company posted adjusted pretax profit for the three months to end-September of 16.6 million pounds on flat revenues of 562.4 million pounds.

Rentokil, which this year started a five-year turnaround plan, said its guidance for 2008 remains unchanged despite the deteriorating economic backdrop making it difficult to predict future trading conditions.

Brown said it "would not be in the shareholders' interest to sell any of the business in the current economic climate and...it will take three to four years before we get all of the businesses running optimally."

The company, which has issued four profit warnings in the last year, has said pretax profit was likely to be 108 million pounds for the full year, down from analysts' previous consensus forecast for 151 million.

Rentokil, which extended the maturity of its financing facilities during the quarter by raising 125 million pounds through the issue of two new notes, said it has "sufficient funding in place" to support its restructuring plans.

The results were viewed as better than expected by the market.

"It was a touch better than our expectations with the over-riding message being that most of the broken businesses are on their way to being fixed," said Seymour Pierce analyst Kevin Lapwood.

Shares in Rentokil have underperformed the UK support services sector by 15 percent over the last 12 weeks and were 7 percent higher at 50 pence by 0815 GMT.

Rentokil said profit in its UK washroom unit fell 5.7 percent to 18.3 million pounds due to contract terminations and legacy issues, while its City Link courier business made a loss of 11.6 million pounds as the recovery plan takes shape.

The company's Initial facilities unit delivered a 16 percent increase in profit due to strong performances in hospital services and supplies business.

Founded in the 1920s to sell a new rat poison, Rentokil has been battling stiff competition over the past few years and has sold its electronic security, guarding and conference units in a bid to focus on more profitable businesses.

(Editing by Hans Peters) Keywords: RENTOKIL/ (rhysl.jones@thomsonreuters.com; 0207 542 4166; Reuters Messaging: rhysl.jones.thomsonreuters.com@reuters.net)

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