The 10 dullest firms with returns that are anything but...
Glamorous tech giants they are not, but these support service firms have quietly delivered, finds Rhiannon Bury
Support services companies are part of probably the most successful sector you have never heard of. Even though many of them are notoriously dull, some have enjoyed stellar performances over the last decade. After all, for every company doing something interesting, there are many more behind it providing the equipment it needs to operate.
Many support services firms grow through acquisitions, and the last few weeks have seen something of a flurry of activity. Last month, distribution company Bunzl bought French and British businesses to add to its roster, in what is now a record year for acquisitions for the firm.
Meanwhile, DCC is expected to complete two huge purchases in the next six months, of Esso’s Norwegian retail business and Shell’s assets in Hong Kong.
Ashtead’s North American arm, Sunbelt, also increased its presence in Canada by buying rival CRS Contractors Rental Supply last week.
From cardboard to credit scores, we’ve tracked the 10 most boring companies that have produced the best increases in share price over the last 10 years. For context, the FTSE 100 was 19.4pc higher last night than on the same date in 2007.
Ashtead
During the last year, rental firm Ashtead has provided matting for Donald Trump’s inauguration and a lift to take the Queen into the new Crossrail station at Bond Street. It prides itself on being able to solve problems for its customers at short notice – in November it supplied 50 pieces of equipment for an event to celebrate the Chicago Cubs’ victory in the baseball World Series. Under the tenure of Geoff Drabble, the chief executive, the firm has grown into a market leader in both the UK and US. Share price rise since August 2007: 1,080.8pc
Intertek
The product-testing company has ridden the crest of a wave brought about by increasing vigilance among large companies that want to reassure consumers their products are meeting the highest sustainability, quality and safety standards. This has been fuelled by scandals such as the Volkswagen emissions testing fraud, which led other manufacturers to appoint third-party testers, such as Intertek, to ensure their own procedures are up to scratch. Analysts this week suggested the firm’s margin potential has a way to go, indicating more growth to come.
Share price rise since August 2007: 370.2pc
Compass
Compass claims to serve around five billion meals every year, in hospitals and schools, on oil rigs and at public attractions. Its clients are as diverse as the Imperial War Museum and the National Grid. In May, shareholders were rubbing their hands together after Compass announced that it would pay £1bn in special dividends. It has found North America a particularly lucrative market, although it now estimates that one in 10 education institutions in the UK use its Chartwells catering division. Share price rise since August 2007: 354.2pc
DCC
Irish firm DCC is the country’s largest distributor of oil products, and has pursued a slow and steady acquisition spree. It has targeted energy-related deals in recent years, and in April bought Shell’s liquefied petroleum gas business in Hong Kong and Macau, its first foray outside Europe. It also operates healthcare and technology arms, giving it diversity across a number of sectors. Tommy Breen, the long-standing chief executive, left the firm last month but its direction of travel under new boss Donal Murphy is unlikely to change dramatically. Share price rise since August 2007: 341.9pc
Mondi
Every cardboard box you’ve had through the post, or document you’ve printed out in your office, could once have been in a Mondi factory. The firm produces boxes, packaging and paper for numerous blue-chip companies including Nestlé and Unilever, and has quietly amassed some of the most lucrative contracts in the industry. Even as the sluggish global economy weighed on the business and increasing prices threatened to derail it, Mondi has kept growing. The main threat to the firm’s profits so far this year has been the upkeep of its mills, but revenues in the first six months of the year were still 8.2pc higher than the same period last year. Share price rise since August 2007: 333pc
Bunzl
Distribution company Bunzl has had a record year for acquisitions and now operates in 30 countries – even if most people have never heard of it. The firm, which supplies mops to cleaning companies and carrier bags to supermarkets, is something of a one-stop shop for business supplies. Over the last 15 years, the company has increased its revenues from £2.4bn to £7.4bn, resulting in its dividend jumping from 13.3p to 42p. Not bad for a company that started when Moritz Bunzl opened a small haberdashery business in Bratislava, now the capital of Slovakia, in 1854. Share price rise since August 2007: 239.4pc
DS Smith
DS Smith operates from 200 manufacturing sites in 33 European countries, producing plastics and packaging, as well as recycling services. It produces pallets and boxes for retailers such as Tesco, Mango and Decathlon, and recycles for local authorities and businesses such as Aldi. Revenues for the firm were £1.77bn in 2006-07; 10 years later they were £4.78bn. At the end of June, shares in the firm hit record highs after it took its first step into the lucrative US packaging market with a £722m acquisition. Share price rise since August 2007: 203.3pc
Experian
Credit data remains Experian’s core business, but it is increasingly moving to offer analytics and marketing services, which help banks and retailers identify and reach potential customers. The company announced recently that it would be rolling out new services in Latin America, where almost all of its revenues come from, providing credit services to financial institutions. Earlier this year, it also sold off a 75pc stake in its email marketing arm for £320m as part of a wider review of its core operations. Share price rise since August 2007: 169.4pc
Distribution company Bunzl now operates in 30 countries – even if most people have never heard of it
Essentra
Unlike its packaging rivals, Essentra has had a slightly less easy ride, crashing into the red in February this year as it battles problems brought about by hasty acquisitions. However, the firm, which produces filters for cigarettes, among other things, has recently appointed Paul Forman, a former Low & Bonar and Coats boss and a turnaround specialist, as chief executive. It could be the company will be on the up again later this year. Share price rise since August 2007: 130.3pc
Homeserve
Boiler repair and insurance provider Homeserve took a step forward earlier this year by buying reviews website Checkatrade, as it seeks online growth. This week it also bought boiler installer Help-link, so you could be seeing a lot more of the company in the months to come. It has almost doubled its revenues from 2006-07 to 2016-17, up from £477m to £785m, and the share price has reacted in much the same way. Share price rise since August 2007: 90.5pc