- - Tuesday, February 10, 2015

Russia’s economy may be imploding, facing falling oil prices, a collapsing ruble and punishing Western sanctions, but at least one company is doing well. Kalashnikov Concern, maker of the rifle of choice for militants and revolutionaries worldwide, says it turned its first net profit in seven years in 2014.

The 207-year-old Izhevsk, Russia-based maker of the AK-47 reported late last week a profit of just over $45 million for the year, benefiting from a 28 percent increase in sales compared with 2013, a company representative told the Tass news agency. The company made the turnaround despite sharp restrictions on trade and financing for Russian companies because of the standoff with the West over Ukraine.

The company doubled its arms production last year to 120,000 units, Kalashnikov Concern chief Alexei Krivoruchko said, despite the imposition of Western sanctions. The jump in production was largely the result of a rebranding of the historic gun company.

“Revenue was [$10 million] higher than in 2013,” Mr. Krivoruchko said. “As a result, Kalashnikov generated its first operating net profit in seven years, amounting to [$1.33 million].”

The company announced 10 months ago that it was laying off a number of managers in a bid to return to profitability.



The company’s signature weapon — the AK-47, named after its inventor, Mikhail Kalashnikov — is one of the most commonly used and sold assault rifles in the world. Its low price, reliability in the field and ease of use have made it a favorite among cash-strapped political regimes, rebel fighters and terrorists.

It has been used by governments in Berlin and Beijing, among others, to quell civil unrest. It has been just as widely deployed by anti-government rebel groups such as Uganda’s Lord’s Resistance Army and Colombia’s leftist FARC movement. It is a favorite among terrorists as well, and many non-Russian manufacturers have put out knockoff versions of the original.

Tully, Pennsylvania-based Russian Weapons Co., the only official American importer of the Russian-made AK-47, reported brisk business for its inventory of AK-47s imported before the trade sanctions were imposed, CEO Thomas McCrossin told CNNMoney last month. He said the restrictions prevented him from even speaking with officials at the Russian company by phone.

“I have a lot of inventory on my shelf bought and paid for,” he said in Las Vegas at the annual gun industry show. “We are permitted to sell these weapons because they were already in the U.S. But when the inventory goes down to zero, there are no more.”

The U.S. company said it would start making its own semi-automatic version of the AK-47 because of the sanctions. Last summer, the Russian-made AK-47s were selling in the U.S. market for $800 to $1,050 each.

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