Non-effective sanctions

Concern "Kalashnikov" in conditions of restrictions continues to search for new markets.
Exports account for 51.1% of the proceeds of the Kalashnikov concern, although by the end of 2017 the share was 55.6%. In absolute terms, revenues from exports of military and civilian products fell by 172 million rubles. in comparison with the last year. "Kalashnikov" does not experience a significant impact of sanctions and is trying in these conditions to enter new markets. In addition, the company is importing electronic products. Experts believe that the company can increase sales of its products.

The share of exports in the proceeds of the Kalashnikov concern in the first half of the year is 51.1%, the company said in its quarterly report. Export is the determining source of the company's revenues. "At the end of 2017, the share of exports was 55.6% of revenue, while in absolute terms, revenues from exports of military and civilian products fell by 172 million rubles. on the results for 2017, "the document says.

The concern emphasizes that the foreign policy environment influences the arms market. In various countries, forces come to power that can be configured both aggressively and friendly to one or another supplier. Because of economic crises, falling prices for oil began to be in great demand less expensive equipment. The concern recognizes that in such conditions the company's positions are improving, as its products are cheaper than foreign analogues. "New opportunities for Russian military exports are opened by the fight against terrorism in general and military operations in various countries of the world," the report says.

The impact of US sanctions imposed on the concern still does not have a significant impact, according to Kalashnikov. Recall, the company is included in the list of persons with whom American partners are prohibited from doing business. However, this led to a significant reduction in the supply of civilian rifle products. In addition, sanctions are imposed on the concern related to the blocking of property and property shares in the United States, and prohibiting all US individuals and entities from providing, exporting or re-exporting, directly or indirectly, funds, goods, services to Russian organizations.

In connection with the sanctions, Kalashnikov is import substituting the electronic component base for Russian analogues, building a new distribution network in foreign markets and trying to enter the markets of South America, Asia and Oceania.

As for possible fluctuations in the exchange rate, the concern notes that they do not have loans in foreign currency. A critical level of inflation is called 30%. With such inflation, Kalashnikov will take measures to reduce accounts receivable and conclude long-term contracts.

"First of all, through sales markets. Concern "Kalashnikov" does not work with Western Europe or America. All other countries of the world do not apply sanctions. The main sales markets, except for Russia, for the concern are the former CIS countries, Latin America, Africa, Asia and the Arab countries. The geography of sales, as we see, is extensive, and it was not affected by the sanctions. Consequently, there is no reason to expect a decline in sales. On the contrary, against the background of the aggravation of the geopolitical situation, one can expect the growth of sales. However, this primarily depends on the launch of new models. The small arms market is extremely competitive and innovations play an important role here, "said Dmitry Shimanov, CEO of MAR CONSULT, a research company.

"Western sanctions against JSC" Concern "Kalashnikov" meant, first and foremost, a ban on the supply of civilian rifle products, that is, sports and hunting weapons, to the United States and a number of European countries. As a result, the company lost the world's largest market of civilian small arms (GSO) - the United States. However, the company managed to reorient itself to other directions of GSO exports, in particular, to the CIS countries, Asia, South Africa, which neutralized the negative effect of sanctions, the company was able to replace those volumes that were supplied to the American market prior to the introduction of sanctions. Meanwhile, access to foreign products for the Russian market is limited due to Russia's response to a number of Western countries, which also contributes to the preservation of the company's leading positions in the domestic market of civilian small arms, "said Anastasiya Sosnova, an analyst at Freedom Finance.