CEO of Taurus, Brazil’s largest weapons company, explains drop in profit in 2023

The profit of Taurus, the largest weapons company in Brazil, was R$26 million in the third quarter of 2023, a drop of 74.8% compared to the same period last year, when the value reached R$103 .1 million.

Year to date, the company’s profit is R$110.3 million, 72.4% less than the amount of R$399 million achieved in the first nine months of 2022.

The company’s net revenue reached R$439.3 between July and September this year, a reduction of 31.4% compared to the third quarter of 2022.

In an interview with the THE TIME, the CEO of Taurus, Salésio Nuhs, explained that two reasons hindered the company’s business this year: the issuing of Decree 11,366/23 by the federal government, restricting the purchase of weapons by Brazilians, but still without regulation; and the rise in inflation and interest rates in the United States, the country where Taurus weapons are most sold.

“In the United States, a trend of change in the stock pattern of products maintained by the sales chain has been observed, with distributors seeking to increase the turnover of their stocks, in order to protect themselves from the financial cost generated by the increase in North American inflation. American. As a result, new orders are postponed with the intention of reducing stocks to levels capable of meeting sales for a period of approximately one month, compared to a previous standard of stocks sufficient to cover 3 to 5 months of sales”, explains Nuhs.

In relation to Brazil, the CEO of Taurus states that the change in rules determined by the new government caused uncertainty in the weapons market in the country.

“On January 1, 2023, Decree 11,366 was published, which established restrictions for the sector and should be regulated within three months, which did not happen. The uncertainty paralyzed the market, with consumers and retailers interrupting their purchases until the issue was resolved. Only on July 21st was the new decree published. However, there remain some uncertainties to be clarified by regulatory bodies, since the maximum energy limit in joules authorized for weapons to be sold on the Brazilian market has been established, but without the presentation of a caliber table”, he explains.

According to Nuhs, new acquisitions of weapons by CACs (collectors, sports shooters and hunters) are basically interrupted. Thus, the CEO of Taurus emphasizes that demand in the Brazilian market remains repressed until the legal aspect is fully clarified and the authorization processes for purchasing weapons are standardized.

Despite the drop in Taurus’ profits in 2023, the company’s CEO makes a comparison with the main American competitors and considers that the numbers were “brilliant” in the third quarter.

“If we talk about Ruger, for example, which is an important competitor of ours in the United States, it has a gross margin of 20.5%, while we have 37.5%. Smith & Wesson has 26.6%. In other words, our margin is much better than those of these companies. So it is a transition factor that we are experiencing in 2023”, she argues.

check out here the full result of Taurus in the third quarter of 2023.

Strong growth since 2018

Salésio Nuhs took charge of Taurus in 2018, after the company had spent years without profit and with a lot of debt. In 2017, for example, the loss was R$286 million.

Under the current management, the company has modernized and created new product models. Since then, the weapons company has registered strong growth, with record sales during the Covid-19 pandemic, mainly in the North American market. In 2020, Taurus already had a profit of R$263.6 million.

“We took advantage of the euphoria in the American market regarding the purchase of firearms during the pandemic. Americans have this characteristic, whenever there is any type of threat, they buy firearms. This happened a lot during the pandemic and we became the largest seller of small arms in the world during this period,” he highlights.

Taurus Outlook

Taurus is expanding its range of customers abroad and already sells its weapons to around 100 countries. The company’s new factory in India will start operating in January 2024. With the installation in the country, Taurus can now participate in tenders from the Indian government, the largest arms buyer in the world today.

“India is already planning to purchase 420,000 rifles. We are already participating in this tender, we have already passed the first stage, the tests should now take place in December. These are rigorous tests, including in the Himalayas, but this is the biggest rifle tender in the history of the world”, highlights the CEO of Taurus. The company also plans to open a factory in Saudi Arabia.

Products

As demand in the USA is currently more focused on the revolvers segment, Taurus has expanded the manufacture of these products on its production line at the Brazilian unit during 2023.

The production of revolvers was responsible for around 45% of the total volume of weapons produced in the third quarter of 2023, compared to approximately 30% in the same period of 2022, gaining ground in relation to the production of pistols, which went from 69% in 3Q2022 to 55% in 3Q2023.

Taurus also has a factory in Georgia, in the United States.

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