"Talk to someone who understands"

"When you need to acquire that much capital, it’s nice not to have to explain what kind of business you run." says Ingvar Klasson, a forestry contractor who, in four years, has tripled his business in this capital intensive industry.

After weeks of February darkness, warm and pale sunlight finally shines through the woods around the small village of Enhörna, in Sörmland, Sweden. But the air is cold and the ground is still frozen. Klasson seems pleased.
“This is exactly how it should be. Sun, cold and just a little snow,” he says, as he climbs up into his yellow, Finnish-made, PONSSE Gazelle forwarder.

Early start
Ingvar Klasson is a typical hands-on forestry contractor. His company turns a solid profit, but sales are relatively small compared to the capital tied up in his machinery. He started work early this morning. At midday, his replacement arrives for the second shift that will last until 9 p.m. “It is hard work to turn a profit. Working shifts gives better margins,” says Klasson.

Growing business
The forest industry is recovering in many countries, like Sweden. In spite of a reduced demand for newspaper pulp, the need for cardboard and sawn timber is currently growing. Klasson has developed from a one man operation four years ago into a four man team with three forwarders. “Landowners today want to minimize soil damage. My little machines trample the ground a lot less than the gigantic machines others use. Furthermore, we are certified according to PEFC certification* for sustainable forest management,” says Klasson. And certified timber commands premium prices.

*A requirement for forest owners who want to sell certified wood at premium prices.

Capital-intensive growth
Growth is an expensive proposition for a forest contractor. Klasson’s three Gazelles represent an investment of between SEK 7-8 million. He uses them for a year or two before he sells them to buy new machines. “Standing still is expensive and customers become dissatisfied if I do not show up when I promise,” says Klasson, whose last eight machines were purchased with funding from PONSSE Finance, a cooperation between PONSSE and DLL.

Knowledge-based conditions
DLL has for many years had a separate business area focused on investments in Swedish base industries such as forestry. Among other ventures, the group provides financing to PONSSE customers through PONSSE Finance. This kind of involvement requires knowledge of both the industry and its players to provide fair loan conditions.
“Like so many other industries, the forest industry has special needs and conditions. We work with many companies in the industry and keep an eye out for both market risks and trends in our analyses. This is a prerequisite for being able to offer good conditions and low interest rates,” says Mathias Räf, Senior Account Manager DLL.

"They know what I am talking about"
On the outskirts of Enhörna, Klasson has a few days – or nights – worth of work left before all the wood is transported to the small access road. Then, he moves to the next patch of forest.
“By the way, this forwarder is next up for a traded-in,” he says. “The new machine will be delivered at the Elmia Wood trade fair this summer. It will be my 11th PONSSE machine and my 10th Gazelle.” Of course, financing of this new machine has already been secured.
“It was a Monday morning when I called my contact at PONSSE Finance. He knows me pretty well by now. I said it was time to replace one of the forwarders, and in the afternoon I received a response and cost calculations.”
He adds, “It is not just that it's fast and I get a good interest rate. They know what I'm talking about. When you need to acquire that much of capital, it's nice not to have to explain what kind of business you run, or what a forwarder is, or why it is even worth it to invest in rural businesses.”