Colt CZ Group reported sales climbed 10.1 percent in the second quarter but were still off 2.7 percent in the half. Operating earnings on an adjusted basis fell 18.4 percent in the half. The Czech Republic firearms giant lifted its guidance for the year.

Key financial data for the first half of 2023:

  • Colt CZ’s revenues in the first half of 2023 reached CZK 6.9 billion ($303 mm), which is a year-on-year decrease of 2.7 percent. The reason was lower sales in the first quarter of this year, the impact of the strong koruna on the translation of revenues from foreign currencies, and the decline of some product segments on the commercial market in the United States. Q2 2023 revenue was up 27.7 percent over Q1 2023 and up 10.1 percent over Q2 2022.
  • The EBITDA indicator adjusted for extraordinary effects for the first six months of this year fell by 18.4 percent to CZK 1,464.2 million ($64 mm).
  • The adjusted profit of Colt CZ reached CZK 1.19 billion ($52 mm) in the first six months of this year, which is 1.3 percent more than in 2022.
  • The number of weapons sold in the first half of this year decreased by 13.3 percent compared to the first six months of 2022 to 314,564 units sold. Short firearms represented 62.5 percent of the sales mix and long firearms accounted for 37.5 percent.
  • Of the total revenues of Colt CZ, in the first half of this year, revenues in the USA accounted for 46.8 percent; 20.0 percent were revenues achieved in the Czech Republic. Canada accounted for 14.2 percent of total revenues, Europe (excluding the Czech Republic) for 10.7 percent, Asia for 4.0 percent, Africa for 1.3 percent and the rest of the world for 3.0 percent.

“I am very pleased that the Group’s business performance in the second quarter of this year improved not only compared to the first quarter, but also the comparable period in 2022. The financial results continue to reflect the increased seasonality of our business related to the increase in the share of sales in the armed forces segment,” stated Jan Drahota, CEO and Chairman of the Board of Colt CZ Group. “I would also like to highlight the acquisition of the Swiss reference ammunition manufacturer swissAA Holding, which is a reliable and long-term partner of Swiss, Belgian, German and other customers from the armed forces. This acquisition is part of our long-term growth strategy, where ammunition is a natural complement to our main products.”

Revenues from sales in the United States decreased by 21.2 percent year-on-year in the first half of 2023, to CZK 3,218.8 million, mainly due to the decline of some segments on the American commercial market. Nevertheless, compared to the previous quarter of this year, sales in the USA increased twice as much. Revenues realized in Canada for the first half of 2023 amounted to CZK 970.9 million, which is 94.5 percent more year-on-year. A significant part of the revenues in Canada is related to the supply to Ukraine. Revenues achieved in Europe (excluding the Czech Republic) for the first half of this year decreased by 13.5 percent year-on-year, to 733.9 million CZK.

Revenues achieved in Africa increased by 157.5 percent to CZK 89.6 million in the six months to June 30, 2023 due to new orders from the armed forces. Revenues in Asia fell by 65.6 percent to CZK 272.2m in the six months to 30 June 2023 due to the seasonality of government orders.

The Group’s financial results for the first half of 2023 correspond to the scenarios that the company indicated in March of this year when publishing preliminary full-year results. The sales results for the first half of 2023 were affected by the higher seasonality of sales in the armed forces segment, the impact of conversion from foreign currencies to the Czech crown and the slowdown of the most important commercial market in the United States of America. Lower demand in the USA affected sales of CZ brand products. The group responded to fluctuations in demand by adjusting the production pace and structure of the product mix, optimizing the number of employees and other measures, especially in the Czech Republic. At the same time, it was possible to conclude a number of important contracts in the segment of the armed forces both in Europe and overseas, which should take place later this year, above the level of the Group’s plan.

Based on the economic results in the first half of 2023 and the current development, the company’s management expects that total revenues in 2023 may reach the amount of CZK 16.0-16.4 billion (previously, CZK 15.1 billion – 15.5 billion), which represents a year-on-year increase of 9.7-12.4 percent compared to realized consolidated revenues in 2022. The expected amount of the EBITDA indicator could reach the level of CZK 3.2-3.4 billion (previously, CZK 3.1 billion-3.3 billion) in 2023, which at the upper limit represents a year-on-year increase of 1 percent compared to the adjusted consolidated EBITDA value achieved in 2022.

The Colt CZ Group, based in the Czech Republic, mainly sells its products under the brands Colt, CZ (Česká zbrojovka), Colt Canada, CZ-USA, Dan Wesson, Spuhr, swissAA and 4M Systems. The group is 76.0 percent owned by the holding Česká zbrojovka Partners SE, and the remaining 24.0 percent are publicly traded shares.

Photo courtesy Colt CZ Group