Can ammunition companies afford new or expanded production facilities?

Ammunition companies are suggesting the investment needed in new or expanded ammunition production facilities for both non-lead and traditional ammunition is not a good investment because of the uncertainty of the market. The California non-lead hunting market is estimated at more than $91 million, more than the current nationwide non-lead shotshell market ($81 million).
All of the companies have reported massive profits from the past decade’s boom in ammunition sales. One of the only public companies, ATK (Alliant Tech Industries) sporting group, which owns Federal and CCI, together one of America’s biggest ammunition producers, posted a first quarter increase in sales this year of 53 percent over 2013. The amount was $358 million, largely driven by sporting ammunition sales. Profit was up 79 percent over the same period.
The reason profit increase was so much higher than sales was because the companies largely funneled production time and raw materials into more expensive ammunition product lines, where mark-up is higher and profit greater. With demand so high, shooters and hunters would buy the higher-priced products because it was all that was available.
With those kinds of profits, is there room for reinvestment in expanded production?

This entry was posted in JIM MATTHEWS. Bookmark the permalink.

Comments are closed.