Armourers reject problems with banks. They come to us themselves, says the head of Colt CZ

René Holeček’s Colt CZ Group is facing a major transaction. Within a few months, he will become the majority owner of the traditional Czech ammunition manufacturer, Sellier & Bellot. The group will pay the current owners, the Brazilian CBC, roughly 20 billion crowns for it.

Unlike its last acquisition, the Swiss munitions company SwissAA Holding, which the group financed with cash and bonds, Colt CZ now also went to the bank for a loan. According to the management of the company, getting it was not a problem.

“We will finance Sellier with bank debt and bonds. We don’t have a problem with banks as such. We have three or four banks that have been cooperating with us for a long time and today they would like to cooperate even more. Although we used to finance ourselves with bonds, banks came to us and wanted to do business with us,” explains Jan Drahota, executive director and chairman of the board of the Colt CZ group, in an interview for SZ Byznys.

At the same time, Minister of Defense Jana Černochová (ODS) criticized some time ago that the armorers have a problem getting money for their business from large banks with foreign mothers.

Colt CZ has no problem with financing from banks because it is listed on the Prague Stock Exchange as a company, claims Drahota. “Banks have seen that since we are on the stock exchange, we are transparent and a more comprehensible company for banks. We have to behave even better than someone who is in the same industry but is not publicly traded,” said Drahota in an interview for Agenda Seznam Zpráv.

Not even the rival Czechoslovak Group (CSG) of Michal Strnad Jr. they don’t run into problems in banks. “A few years ago, we were looked down upon by society, politicians and some banking houses as arms manufacturers, and we were at the tail end of their interest. Today it changes. It’s not ideal, but it’s definitely a significant change compared to the approach from two years ago,” said David Chour, CSG’s executive director.

Colt CZ did well last year. Revenues reached 14.86 billion crowns, but grew only slightly year-on-year – by 1.8 percent. The head of the company is disappointed by the numbers. “We had bigger ambitions. It was the second best year in revenue ever. But our ambition is to grow. We wanted to have double-digit growth. We are eternally dissatisfied,” comments Drahota.

The net profit of the arms group for last year after taxation was approximately 2.04 billion crowns, an increase compared to 2022 last year was 0.4 percent. The board of directors will propose to the general meeting the payment of a dividend of 30 crowns per share, the same as last year.

Revenues were negatively affected by the stronger crown last year. “We are hedged, but it still has an impact on sales, we are not 100 percent hedged,” explained Jan Drahota. According to him, the results were worse than expected, also because of the slow administration in the United States. “The approval process sometimes takes longer. Licensing, especially overseas, is a long process,” says the executive director.

Last year, the holding company sold a tenth less weapons than in 2022. Short firearms were represented by more than 60 percent, long firearms by almost 40 percent. While supplies to the armed forces grew – the concern supplies the US, Canadian and a number of European armies – the brand fared less well in the commercial market.

“The market grew extremely in 2020 and 2021, so it has fallen a bit. However, this does not excuse the fact that we want to grow faster than the market,” comments Drahota on the results.

The company plans dynamic growth for this year. “The CZ brand is still underrepresented in America, it has much greater potential. For me, it’s a ‘Skodak’, a great product at the right price, which is competitive even with luxury brands,” says Jan Drahota.

Agenda