CSG Shares Jump 11% as Q1 Results Show Defence Strength and Munitions Turnaround

Shares in Czechoslovak Group (CSG) surged 11.16 percent to €19.30 on Wednesday, staging a sharp recovery as the defence contractor published its first set of quarterly figures since listing in Amsterdam. The gain, which lifted the stock 20.61 percent over the past seven days, reflects growing confidence that the company can rebut the allegations levelled by short-seller Hunterbrook Media earlier this year. Moody’s recently upgraded CSG to investment grade at “Baa3”, with Fitch confirming a “BBB-” rating, a move that lowers future financing costs and opens the door to institutional investors who mandate minimum credit scores.

The quarterly report delivered the hard production data investors had been waiting for. Group revenue came in at €1.544 billion, with operating EBIT of €372 million and net income from continuing operations of €299 million. The Defence Systems segment, the company’s main earnings engine, saw revenue climb 26.5 percent to €1.251 billion, driven by strong demand for medium- and large-calibre ammunition as well as a sharp uptick in land systems. Operating EBIT at the segment reached €356 million, underpinning the group’s overall performance.

The Ammo+ unit, which had been a drag on sentiment, continued to struggle in the first quarter. Revenue fell to €291 million from €366 million a year earlier, and operating EBIT slipped to €13 million, leaving the margin at just 4.3 percent. CSG cited tough conditions in the commercial US market alongside investments in headcount and capacity. Yet the tone from management was notably more optimistic. Demand in the US picked up noticeably late in the quarter, and prices improved. The company expects higher sales and better margins as the year progresses, pointing to an expanded supply relationship with the FBI and new capacity for 5.56mm ammunition targeting US defence and law enforcement customers.

Should investors sell immediately? Or is it worth buying CSG?

The order book underlined the scale of the opportunity. The backlog stood at €17 billion at the end of the quarter, up from €15 billion at year-end, while the pipeline of contracts under negotiation remained at €27 billion. That order inflow lends weight to CSG’s claim that it is a genuine producer, countering the short-seller thesis that painted it as a holding company rather than an operational defence manufacturer. Europe, excluding Ukraine, remained the largest revenue region, with NATO countries accounting for roughly 64 percent of total sales.

A trio of near-term catalysts now looms. The Austrian competition authorities are set to rule on CSG’s plan to acquire a 49 percent stake in Hirtenberger Defence Systems, a mortar specialist that would strengthen the company’s land and artillery portfolio. A joint venture with Hungarian partner 4iG in Slovakia is also awaiting clearance. Simultaneously, the clock is ticking on a potential financing boost for a massive framework contract. CSG’s subsidiary ZVS Holding signed a deal with the Slovak defence ministry worth up to €58 billion for ammunition, ideally funded through the EU’s SAFE programme, which offers loans at 1 percent interest over 40 years. The catch is political: Slovakia needs at least one other EU member to join the application to access the favourable terms. Romania has already declined, Croatia is still undecided, and the opt-out provision for single countries expires at the end of May. CSG stresses the framework carries no firm orders and is not dependent on any single funding source.

The balance sheet is on a firmer footing. Net debt fell to €2.228 billion from €3.004 billion at the end of 2025, helped by IPO proceeds. The group’s earnings guidance for the full year 2026 remains intact, with revenue of €7.4 billion to €7.6 billion and an operating EBIT margin of roughly 24 to 25 percent. One lingering concern is the elevated net working capital, which CSG attributes to inventory build-up, prepayments and timing effects on receivables.

For now, the stock has broken away from its recent low near €15.73, but at €19.30 it still sits 13.86 percent below its 50-day moving average. The coming month will determine whether the rally has further room to run. If Ammo+ delivers the recovery management has promised and the regulatory hurdles in Austria and Brussels clear, the shares could close the gap to that average. If the EU financing scheme stalls or the quarterly numbers fail to convince the market of CSG’s production credentials, the floor could be tested again.

Ad

CSG Stock: New Analysis - 20 May

Fresh CSG information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

Read our updated CSG analysis...

en | NL0015073TS8 | CSG | boerse | 69384442 |