Unwrapping the 'Bungle' from Bunzl

Business Profile: Tony Habgood turned around a 'boring' packaging group to put it into the FTSE 1

Boring, boring, boring. It is the word which crops up most often when discussing perceptions of Bunzl, the supplier of plastic bags and manufacturer of cigarette filters. And it is a perception that suits Tony Habgood, its chairman, very nicely, thank you.

He doesn't seek the limelight for himself, and he doesn't particularly seek a City following for his company. He just gets on and runs it. But, on the quiet, Bunzl has been one of the most consistent performers of the past decade, and Mr Habgood's achievement in turning the business around since his arrival in 1991 was crowned earlier this year by the company's return to the FTSE 100.

"I don't think [being in the FTSE 100] makes any difference really," he says, typically talking down the sort of thing that would justify a headline, or get an investment banker excited, or allow him a little moment of applause. "Investor interest starts to rise in the year or so before one goes into it."

It is a matter of size. Bunzl is five times the size it was when Mr Habgood took the helm and decided to focus on supplying what he calls "outsourcing services" to supermarkets and caterers, a one-stop shop for the carrier bags, food trays, clingfilm and other bits and pieces they use. He has built the business through nigh on 50 acquisitions and what he calls a "controlled decentralised" decision-making structure. He has earned a reputation as a "thinking manager".

He says: "We have built over time some really good international businesses, in their own little way world leadership businesses, and helping management on the ground to develop those sorts of positions is very rewarding."

The historic core of Bunzl, its paper making business, was finally sold a couple of months back. The Bunzl family began producing paper in the 1870s. And in 1940, after fleeing anti-semitism in Austria, the Bunzls who had settled in the UK set up Tissue Paper Ltd, the company which became the modern group.

After unveiling another strong set of financial results last week, Mr Habgood was furious at the suggestion he was considering selling off another long-standing business in plastics manufacturing. In part, he blames the investment bankers, keen to make a fee from a bit of corporate activity.

"Like many things in business, you're in what you're in because they were there. As one has sorted through those, the ones we have kept and developed are ones where we have strong international positions in niche businesses. It's a continuous project. Businesses are living, changing organisms..

"We certainly don't have any plans to dispose of the plastics business now. We have just disposed of the paper division and have got money in from that and we haven't spent that money. Why we would now turn round and sell businesses which are doing well – unless we had an extraordinarily compelling offer – I can't think. People want churn, they make money out of churn, crudely."

You don't have to read too deeply between the lines to find Mr Habgood's ambivalent attitude toward the City. In general, he leaves the day-to-day dealings with the analyst community to his finance director, David Williams.

"I enjoy hearing their views," Mr Habgood says. "They have a different perspective on life. You gain a very distinct flavour of what is on the minds of the investment community, which varies with time and the economic conditions. You're well advised to take good account of those, along with all kinds of other input. My fundamental preoccupation is always with the prosperity of the group."

One analyst at a big investment bank says there are concerns that Bunzl does not make enough of an effort to communicate the finer details of its business. He said: "Any meeting with Bunzl only lasts about 20 minutes. They could help themselves by improving their disclosure. That's a concern of a lot of the shareholders I speak to, but Mr Habgood himself is affable and pretty well regarded."

A colleague says: "He is someone who cares more about his staff and his customers. I wouldn't suggest he dislikes the City but he sees it for what it is, a hub for capital with a job to perform. He treats the City with reasonable scepticism."

In general, the City will tolerate a little bit of distance as long as the profits keep rolling in, and Mr Habgood's record should see him through any short-term wobbles. "I wouldn't like to test it, though," he says.

He is one of the longest-standing FTSE 100 bosses, and there is little sign of him wanting to move up to a non-executive role or to move on.

A management consultant by training, Mr Habgood has a history of running historic companies with silly names. His last berth was at Tootal, the textile group. Tootal was a basket case when he became chief executive in 1991, and it was swiftly put out of its misery by Coats Viyella. "We had made a number of changes in very short order there and we would certainly have delivered a fair amount of value. Then there was a hostile bid which we regrettably lost. I don't like losing."

He faced a similar turnaround task at Bunzl in 1991, when it was widely lampooned as "Bungle". "I think Bunzl is a good name, because it's an anonymous name while at the same time it has a fair amount of meaning for people in the trade. When I joined there were people who said I really ought to change the name, because the reputation of the company wasn't very good. My solution was to fix the reputation."

Bunzl is unusual for having just three executive board directors, but Mr Habgood bristles when quizzed on corporate governance issues, and in particular his own dominance in the role of executive chairman.

"The board has been reconsidering that on an annual basis. I obviously don't participate in those deliberations. Last year they weren't minded to change it," he said. "I'm a believer in having a majority of non-executive directors and if you are going to have a majority of non-executives and a small board, you have to have relatively few executive directors. It's only by having a relatively small number of non-executive directors that you can keep them well informed."

His determination to encourage an informed debate with his non-executives is borne out his own experiences in non-exec roles. He was previously at NatWest, PowerGen and Geest and currently at Schroder Ventures, the private equity group, and laughs when people try to identify a link between them.

"Remember, I come from a consulting background, a generalist background. If there is one thing in common about them, it is that there is nothing in common about them. They are providing stimulus in different areas."