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Olin Winchester Bullet Sales Surged Days Before Election

Olin Corp. (OLN), the biggest U.S. retail supplier of small-caliber ammunition, said a surge in sales for its Winchester bullets and shells that began days before November’s U.S. election will continue to bolster earnings through the third quarter.

Pretax earnings at the Winchester unit jumped to $16.5 million during the fourth quarter from $500,000 a year earlier, Clayton, Missouri-based Olin said today in a statement. The segment’s retail revenue growth outpaced military and law- enforcement sales, Olin Chairman and Chief Executive Officer Joseph D. Rupp said today on a conference call with analysts.

“Consumer purchases of ammunition began to trend upward on the Saturday before election day,” he said. “The trend has continued with sales currently only being limited by product availability.”

President Barack Obama’s election and fears of new weapons restrictions after a series of mass shootings have fueled record demand for guns and ammunition. Democratic governors and lawmakers in at least 10 states are seeking new firearms controls in the aftermath of the Dec. 14 killing of 20 children and six adults at Sandy Hook Elementary School in Newtown, Connecticut.

“The current surge is stronger and has expanded across the product line more quickly than the late 2008-early 2009 surge,’ Rupp said. ‘‘We would expect high levels of demand to continue at least through the third quarter.’’

Chemical Business

Olin, which gets most of its revenue from chemicals such as caustic soda and bleach, fell 5.8 percent to $22.55 at the close in New York, the biggest decline since July. Olin’s projections for its chlor-alkali unit were a disappointment, Edward Yang, an analyst at Oppenheimer & Co., said in note.

The Winchester unit’s commercial business, which supplies retailers with bullets and shotgun shells, had an ammunition backlog valued at $280 million in January, compared with $29 million at the end of 2011, Rupp said.

New York this month became the first U.S. state to require real-time background checks for ammunition as part of a gun- control law that also bans Internet sales of ammunition. California lawmakers are proposing a tax on bullets and licensing of ammunition dealers.

Such legislation may ultimately reduce Winchester ammunition revenue by ‘‘a couple percent,” Rupp said.

No Divestment

Olin doesn’t plan to divest Winchester because it’s “very profitable” and has “a long runway ahead of it,” Rupp said in response to a question on the call.

“Would we reconsider selling it at an appropriate time? We may, but right now, that’s not on the table,” he said.

Cerberus Capital Management LP announced last month it will divest Freedom Group Inc., the largest U.S. gunmaker, after one of its Bushmaster semi-automatic rifles was used in the December shooting at Newtown.

Olin sold its Winchester firearms unit in 1981 to the U.S. Repeating Arms Co., which makes Winchester-brand rifles and shotguns under license from Olin.

To contact the reporter on this story: Jack Kaskey in Houston at jkaskey@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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