About 1,134 companies in 98 countries around the world are in some way involved in the production of small arms and ammunition. Civilians purchase more than 80 percent of the firearms manufactured each year, according to GlobalIssues.org.Though all small arms and light weapon possession might not be legal, about 500 million small arms are in circulation around the world – and someone has to supply the ammunition.
American Ammunition Inc. (OTC BB: AAMU) was formed in 1983, and became public in 2001. The ammunition manufacturer focuses on the small arms ammunition market, supplying ammunition across the globe for commercial, law enforcement and military use.
The company is feeling the drive from the ammunition industry which had an estimated 28 percent increase in revenue between 1991 and 1998. In a press release the company reported this trend is expected to continue through 2006 and beyond.
The company recently announced a 25 percent increase in its rifle ammunition sales for the first quarter of 2007. Though first-quarter sales have yet to be released, Andres Fernandez, president of American Ammunition told Market News First he estimates sales to be around $700,000. The results reflect restructuring efforts and product expansion.
Fernandez added that rifle ammunition provides much more growth margin than the handgun ammunition and enhances the overall margin of profitability – expanding its product line has boosted growth. The company is now expanding the production of rifle calibers which bring in three to four times a greater profit margin than handguns.
“I’d attribute [the growth] to the diversity of the calibers and the types of projectiles we’re offering,” he said. “We’re giving the end user a wider array of products they can purchase from us.”
In the past year, the company has evolved from a distribution network to utilizing dealer direct sales, which allow for faster processing of orders. American Ammunition distributes to a network of about 1,500 independent dealers across the U.S. and plans to increase that number to 5,000.
More than 900 billion dollars are spent in the arms industry each year – it’s an industry familiar to nearly every industrialized country in the world. The arms industry includes guns, ammunition, missiles, military aircraft and associated products. American Ammunition has found it’s not the gun that hits the target, but the bullet.
Shares of American Ammunition were trading at 27 cents Tuesday afternoon.
