Leading dealerships of construction equipment with strong aftermarket offerings


Ferronordic is an authorized dealer of construction equipment under a number of brands throughout Russia. These brands include Volvo CE, Terex Trucks, Dressta, Mecalac and Rottne. In addition, Ferronordic is an authorized aftermarket dealer for Volvo Trucks and Renault Trucks. The company’s goal is to become the leading service and sales company in the CIS markets.


Volvo has historically been active in the Russian market. The company started supplying trucks in 1973, and in 2003 became the first Western manufacturer with local production (Zelenograd). In 2009, Volvo opened an assembly plant in Kaluga with an annual capacity of approximately 15,000 trucks. Volvo’s Construction Machinery (CE) segment was established in the Russian market in 2002, and has since gained a strong foothold as one of the leading brands. In 2014, Volvo CE acquired Terex Trucks, which manufactures dump trucks with a load capacity of 41–91 tons.

Ferronordic was founded in 2010 with the objective of acquiring and expanding Volvo’s distribution to a large part of the Russian market and capitalizing on the significant potential. Ferronordic expanded substantially in 2010–2013, increasing its number of outlets from the six facilities taken over from Volvo to 75. The expansion was nationwide, from St. Petersburg in the west to Magadan in the eastern part of Russia. The number of employees rose from 160 to 731 at the end of 2013.

During the period, and despite a downward market, the company continued to implement its vision to bring in additional brands. The brands added were Terex Trucks (2014), Dressta (2016) and Rottne (2016), plus Mecalac in mid-2017. The broader range in areas such as mining and forestry led to a diversification of the business, thus also reducing the risk in the company.

Broad authorized brand portfolio

Ferronordic is the sole authorized dealer for Volvo CE, Terex Trucks, Dressta, Rottne and Mecalac throughout Russia. Ferronordic has also been appointed the aftermarket dealer for Volvo Trucks, Renault Trucks and Volvo Penta in parts of the country. In 2017, Volvo CE made up 80% of the company’s net sales, other brands 16%, and its contracting services 4%.


The Russian construction equipment market has fluctuated, with strong gains in 2007, 2008 and 2011. In 2003–2013 the market experienced CAGR of 34%, and in 2013–2015 it was -59%. General demand for construction equipment is driven by Russia’s overall economic performance. The Russian economy is highly dependent on oil prices, making these an important parameter for market growth. The market is also driven by infrastructure investment, and we regard this as currently severely neglected. An example of this is the country’s road density, which is among the lowest in Europe, and there has been no major investment since the Soviet era. The government’s budget stipulates higher investment in infrastructure, and hosting the FIFA World Cup is also likely to be a spur.

Equipment Sales

The Equipment Sales segment consists of two parts: new sales and used sales. In full year 2017 this segment accounted for 69% of the group’s sales (62). New sales include the brands Volvo CE, Terex Trucks, Dressta, Mecalac, Rottne and gensets through Ferronordic’s own brand. New sales are divided into the sub-segments GPPE, Utilities and Road, and Ferronordic is most active in GPPE and Road, which include larger, more complex and high-quality machines. Excavators, backhoe loaders, wheel loaders, tipping trucks and dumpers account for most of the sales.


The Aftermarket segment accounted for 27% of group sales in FY 2017, a decrease of 600 bps Y/Y. Aftermarket consists of two arms: spares and servicing. Spare parts account for most of the segment’s sales, and this is also the arm with the highest margin. Aftermarket sales are highly profitable in most industrial companies and are thus an important parameter for the company’s profitability. The aftermarket for Construction Equipment is profitable for Ferronordic, but not at the same level as companies operating in Trucks. This is because basically all servicing is conducted at the customer’s premises since the transport of non-functioning machines across Russia is highly costly and logistically difficult. This means that Ferronordic travels out to its customers to perform servicing, which means that this part of the aftermarket tends to have slightly lower profitability than the sale of spare parts. Growth within the segment is likely to come primarily from customers continuously replacing their machines; as an approved Volvo Certified Rebuild provider, Ferronordic renovates and resells these machines with a new warranty.

Figure: Ferronordic´s updated financial targets

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