Ferronordic is a service and sales company in the areas of construction equipment and trucks. Our core business consists of selling, repairing and maintaining different types of machines, trucks, engines, spare parts and attachments. In addition, we provide consultancy services such as machine operator trainings. We also have a growing business in contracting services where we, with our own machines and operators, perform assignments for customers, primarily in the mining industry.
Construction (VCE) equipment sales consists of sales of new and used machines. Most of the machine sales comes from new Volvo CE machines, such as haulers, wheel loaders, excavators and pavers. In 2019 sales of Volvo CE machines accounted for 89% of the new machine sales (measured in units). New machine sales also include haulers from Terex Trucks (in 2019 replaced with Volvo-branded haulers), bulldozers from Dressta, backhoe loaders from Mecalac and forestry machines from Rottne.
In addition Ferronordic also sells attachments from various producers. Machines sales also includes used machines. These are either machines from our own rental fleet or contracting services business, machines purchased from customers in connection with trade-in deals or machines purchased for resale. Our used machine sales are still small and thus has potential to grow as the market develops. As of 2020, Ferronordic is also the authorized dealer for Volvo and Renault Trucks in parts of Germany.
Since 2017 we are a supplier of Volvo Certified Rebuild for articulated haulers, excavators and wheel loaders. Volvo Certified Rebuild is a program where used equipment is rebuilt in accordance with Volvo CE’s standards in order to obtain a second or even third life-cycle. The rebuilt machines can then be sold as “Certified Rebuild” with a new warranty from Volvo CE. Ferronordic was one of the first Volvo CE dealers to be approved for the program and the first dealer in Europe to be approved for excavators.
The equipment we sell is designed and stress-tested to be productive every hour of every day regardless of conditions and climate. Our clients use our machines and trucks as an integral part of their production chain. The most important cost to our clients is often not the machine, the fuel or the operator, but the risk of downtime. Making sure our products are always operational and productive for our customers is a top priority for us and the aftermarket, which consists of service and sales of parts, is therefore at the core of our business model.
The largest share of the aftermarket sales consists of sales of spare parts, mainly for construction and forestry machines, but also for trucks and engines. Good parts availability is of significant importance for dealers and can be a distinguishing competitive factor. For this reason, we maintain stocks of parts throughout our markets. Proximity to the customers is crucial for prompt delivery. Our presence across Russia and Kazakhstan provides us with close customer access and enables us to offer timely customer service. We also offer overhaul of vital components such as engines and gearboxes and complete rebuild of used machines.
In Germany, our service network covers an area that consists of 20% of the total German market which is the largest truck market in Europe. We have a presence in eleven strategic locations in Hessen, Saxony, Lower Saxony and Saxony-Anhalt and offer a broad range of services that includes scheduled maintenance, diagnostics, as well as scheduled and unscheduled repairs. We also offer various types of service contracts that provide increased stability in the business and improve the possibility for clients to predict future revenues and cash flows. In respect of both machines and trucks, service is provided where our customers need it; out in the field, at the customers’ sites or at our service stations.
As part of our strategy of becoming increasingly integrated in the business of our customers, we offer contracting services where we own the equipment and engage operators to carry out assignments and specific tasks for customers. The current contracting services projects encompass excavation and transportation of earth and rock for customers in the mining industry. Payment is based on the volume of earth and rock transported. This type of outsourcing is common in the mining industry in other parts of the world but is still relatively undeveloped in our markets. However, we believe that demand for contracting services will grow in both Russia and Kazakhstan and we see opportunities to expand this business. In the future, we may also extend similar services to customers in other industries and in all our markets. In the second half of 2019, we expanded Contracting Services with an agreement signed with Russian mining company GV Gold which involves 34 machines and 143 employees, most of whom are machine operators. The project encompasses excavation and transportation of overburden at a gold mine in the Irkutsk region of Siberia.