Middle East helps double weapons-maker Kalashnikov's sales — CEO

ABU DHABI — Russian weapons maker Kalashnikov Group's sales doubled last year, helped by demand in the Middle East for its drones, missiles, rifles and military vehicles, making up for US sanctions that cost it its largest market, its chief executive said.

Kalashnikov, whose AK47 assault rifles have armed Russian forces for 70 years, embarked on a modernisation programme and targeted new markets after it was ousted from the United States due to sanctions for Russia's role in the Ukraine conflict. 

It invested 10.5 billion roubles ($182 million) over 2014 to 2017 and targeted new markets for its lines of assault and sniper rifles, guided artillery projectiles and precision weapons.

It plans to invest more than 10 billion roubles over the next two years, Alexey Krivoruchko said.

The programme has paid off and the Middle East is now its largest market, accounting for the bulk of its exports, he told Reuters on the sidelines of the International Defence Exhibition (Idex) in Abu Dhabi.

"Sales have doubled in 2016 with demand growing for weapons, drones and other products," Krivoruchko said, declining to give figures or further details.

Military products now account for 80 per cent of sales with civilian sales accounting for the rest, unlike before US sanctions when it was the reverse, he said. Its civilian products include hunting shotguns and sporting rifles. 

To keep up with orders, it is hiring 1,500 more people to staff its factories 24 hours a day, seven days a week, as it expands operations across its companies, Krivoruchko said.

It is also in advanced talks with a partner in India to start producing assault rifles there, possibly this year.

"India is a very big market and we like the 'Make in India' programme," he said, adding Kalashnikov is also in talks with two other countries to set up similar joint ventures.

Krivoruchko and investor Andrei Bokorev bought a 49 per cent stake in Kalashnikov from state-owned holding company Rostec in 2014. Three weeks ago, they bought another 25 per cent stake from Rostec, taking their ownership to nearly 75 per cent, he said.

"We have more flexibility in making speedy decisions now for faster growth of the company," he said. 

Kalashnikov is keen to return to the US market, but there are no indications yet from the new administration that sanctions will be lifted, he said.