11.08.2009

Palfinger invests in Russia

Crane and aerial lift manufacturer, Palfinger has entered into a sales joint venture with its Russian dealer, the Kraft Invest Group to expand its operations in Russia.

Kraft has specialised in the distribution of construction equipment and engines in the Russia for more than 16 years and started selling Palfinger loader cranes in 1996, with the help of its 15 sub-dealers. Other products include Liebherr earthmoving, Wirtgen, Elba Deutz and Cummins.

Palfinger sales in Russia have grown rapidly in recent years, in spite of the current slow down in the region which began last November as the economic crisis began to bite.

Palfinger says that it expects the recent mid-term trend of 10 percent average annual growth in the market to continue in the post-crisis economy as companies switch to more efficient material handling technologies. As such this is one of the best times to change – and upgrade - its distribution in Russia.

Palfinger will hold 49 percent of the equity in the joint venture with Kraft holding the remaining 51 percent. The new operation will be the exclusive distributor for Palfinger cranes, It will also handle Epsilon timber and recycling cranes, MBB tail lifts, and Palift container handling systems.

Palfinger’s chief executive, Herbert Ortner, said: “We have been closely monitoring Russia for quite some time now as, due to its sheer size, the local market offers an enormous potential. The joint venture allows us to promote the sale of our own products in Russia, by helping the dealer to set up an appropriate network while implementing targeted sales strategies.”

Vertikal Comment

Given the challenges of selling equipment in the Russian market and maintaining progress and getting paid during downturns such as this, the move to a joint venture is probably a smart move, especially if the investment uses existing inventory or receivables. (This is not necessarily the case here)

This is an excellent example of a company taking strategic steps now in preparation for the upturn in order to steal a march on competitors.