Rentokil Initial, the world's biggest pest control company, said it was planning to beef up investment in its struggling divisions as it attempts to overcome a 20 per cent drop in profits.

The group, which is currently fighting to stave off a possible bid, saw half-year profits fall to £135.4 million after being hit by continued tough trading conditions and previous restructuring efforts.

It is to sell its business conference arm and refused to rule out further divestments.

"Right at this time there are no other disposals planned. But what we wish to go forward with we'll keep an open mind about," chief executive Doug Flynn said.

The conference business delivered operating profit of £10.7 million on turnover of £44.1 million in the first half.

Rentokil has been struggling to maintain margins after its diverse operations, which include parcel delivery and washroom and security services, lost market share to more focused rivals.

Hit by declining earnings for the past four years, the ailing company said it would focus its immediate attention on its pest control and washroom and textiles arms.

Mr Flynn, who took the top post five months ago, said yesterday Rentokil was too introspective and focused on short-term goals.

He also warned operational costs had been squeezed to such an extent that quality of service had suffered.

"Prices were also pushed to 'unsustainable levels' and costs relentlessly taken out," said Mr Flynn.

"Issues affecting the group are not that complex individually, but there are many of them.

"Detailed action plans have been formulated, many of which are already underway.

Rentokil's chairman Brian McGowan, who has come under fire this week over the company's lacklustre performance, said he was confident the situation would improve

He said: "The programmes we are implementing will provide real and lasting improvements in operational and financial performance and thereby generate the value inherent in the company."

Mr McGowan has stated that his strategy is to focus on investing more in research and development, upgrading computer systems and hiring more staff, in an effort to improve service levels.

However, with little sign the strategy has arrested the decline in profits, Mr McGowan and Mr Flynn, are under mounting pressure to hive off underperforming business units.

Mr McGowan led a boardroom coup in 2004, ousting founder and long standing chairman Sir Clive Thompson. Known as "Mr 20 per cent" for leading years of rapid growth, Sir Clive was accused of focusing on short-term returns rather than the future of the business.

On Monday Sir Gerry Robinson, one of Britain's bestknown businessmen, said he was interested in bidding for the company.

Shares in Rentokil, closed yesterday at 1621/4 pence, valuing the business at about £2.9 billion.