Ferronordic Machines
Ferronordic - ESG profile (ABG Sundal Collier)
2019-06-12 14:58
Solid strategy to mitigate Russian worries
Being a distributor of construction equipment in mainly the Russian market (now also expanding into Kazakhstan), we believe worries about corruption are warranted. In addition, tensions between both Russia-US and Russia-EU have historically led to negative sentiment among foreign investors. Nevertheless, we believe Ferronordic’s strategy to be a Swedish company with a Swedish management/board and follow the Swedish Code of Corporate Governance gives the company a competitive advantage. We argue that these factors increase confidence and also make the company a trusted partner among customers and suppliers alike. The company has never had any issue transferring liquid funds to/from Russia, and has never cancelled a dividend. In terms of environmental aspects, we believe that the company’s strategy of offering high-quality Western machines improves fuel efficiency and reduces emissions compared to operating domestic/Chinese machines of lower quality. The transportation of heavy equipment is largely done by rail, lowering the environmental impact.
A Swedish company with Swedish corporate governance
Zero tolerance for corruption is a fundamental part of Ferronordic. Although it is difficult for us to validate, we believe that the compulsory employee training, the whistle-blower function, emphasis from management and the CEO/CFO personally approving contracts support this claim. The company’s employees often operate in harsh environments, but Ferronordic has company-wide labour safety programmes in place and has seen a decline in average sick days per employee.
Being a distributor of construction equipment in mainly the Russian market (now also expanding into Kazakhstan), we believe worries about corruption are warranted. In addition, tensions between both Russia-US and Russia-EU have historically led to negative sentiment among foreign investors. Nevertheless, we believe Ferronordic’s strategy to be a Swedish company with a Swedish management/board and follow the Swedish Code of Corporate Governance gives the company a competitive advantage. We argue that these factors increase confidence and also make the company a trusted partner among customers and suppliers alike. The company has never had any issue transferring liquid funds to/from Russia, and has never cancelled a dividend. In terms of environmental aspects, we believe that the company’s strategy of offering high-quality Western machines improves fuel efficiency and reduces emissions compared to operating domestic/Chinese machines of lower quality. The transportation of heavy equipment is largely done by rail, lowering the environmental impact.
A Swedish company with Swedish corporate governance
Zero tolerance for corruption is a fundamental part of Ferronordic. Although it is difficult for us to validate, we believe that the compulsory employee training, the whistle-blower function, emphasis from management and the CEO/CFO personally approving contracts support this claim. The company’s employees often operate in harsh environments, but Ferronordic has company-wide labour safety programmes in place and has seen a decline in average sick days per employee.
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