Colt CZ Group reported operating earnings on an adjusted basis fell in the first quarter ended March 31 as sales were down 15.2 percent.

Q1 2023 Financial Highlights

  • The Group’s revenues in the first three months of 2023 amounted to CZK 3.0 billion ($136 mm), down by 15.2 percent y-o-y, mainly due to the higher seasonality of M/LE (military/law enforcement) sales, the impact of FX translation of USD and EUR into CZK and also the decline of some product segments on the US commercial market.
  • Adjusted EBITDA reached CZK 683.4 million, down by 28.4 percent y-o-y for the first quarter of 2023.
  • Net profit for the first three months of 2023 reached CZK 587.8 million, which is 7.9 percent more compared to the same period in 2022, due to the positive result from financial operations at the back of the gains from the derivatives transactions which the Group uses for hedging the fluctuation of CZK exchange rate against USD and EUR.
  • The number of firearms sold in the first quarter of 2023 declined by 25.3 percent compared to the same period in 2022 and reached 149,511 units sold.

“The results for the first three months of this year were relatively weaker compared to the same period in 2022 which was historically the strongest first quarter of the year that our Group ever recorded. The financial results reflect the higher seasonality of our business which is related to the higher share of sales to the M/LE segment, the strengthening of CZK against USD and EUR and the relative slowdown of the US commercial market in those segments where the CZ brand has been traditionally strong. We anticipated this development and responded to it with several operational and cost-cutting measures. At the same time, we are succeeding to secure new contracts for the military and law enforcement segment in our key markets. The Group management strives to meet the indicated full-year ambition for revenues and other Group KPIs in 2023. We assess positively the increase of the net income, which is essential to our ability to pay future dividends to shareholders,” commented Jan Drahota, CEO and Chairman of the Board of Directors of Colt CZ Group.

2023 Guidance Confirmed
The Group’s financial results for the first quarter of 2023 correspond to the scenarios that the company indicated in March this year when publishing preliminary full-year results. The sales in the first quarter of 2023 were affected by the higher seasonality of sales to the M/LE segment, impact of FX translation into CZK and the slowdown in the most important commercial market for the Group, in the United States of America. Lower demand in the USA affected sales of CZ branded products. The Group responded to demand fluctuations by adjusting the production cycle and product mix structure, optimizing the headcount and other measures, especially in the Czech Republic. At the same time, the Group signed several significant contracts in the M/LE segment both in Europe and overseas, which will materialize still this year. Nevertheless, the company has decided to take a cautious approach and for now not to change the communicated guidance for 2023, which remains in three scenarios.