CSG and Reunert Forge Fuse-Making Venture as NATO Orders Mount, But Market Remains Unimpressed

Czechoslovak Group partners with South Africa's Reunert to produce electronic fuzes in Slovakia, targeting NATO's artillery bottleneck. Q1 revenue rises 13.8% but stock slides.

The Czechoslovak Group is doubling down on the most pinched point in Europe’s artillery supply chain: the fuse. By teaming up with South Africa’s Reunert to build a dedicated production site for electronic fuzes in Slovakia, CSG is moving beyond munitions assembly into the high-precision components that often dictate delivery timelines. The new entity, Fuchs Electronics Europe, will be majority-owned by Reunert with 51 percent, leaving CSG with 49 percent, and will operate from CSG’s existing ZVS complex in Dubnica nad Váhom. Fuchs Electronics, a Reunert subsidiary with over six decades of fuse experience, provides the technological backbone – a scarce skill set within the European Union.

The joint venture is underpinned by a binding initial order and is expected to reach breakeven after roughly three years, subject to standard regulatory clearances covering foreign investment, competition, defence, and foreign exchange. Once running, it will supply not only CSG’s own munitions lines but also other European artillery producers, aiming to relieve a bottleneck that has become a central concern for NATO planners. Modern electronic fuzes capable of impact, delay, timed, and airburst modes are a critical enabler for 155 mm shells, and their short supply has repeatedly slowed deliveries across the continent.

That logic is already driving an inflow of orders. CSG announced on 3 June that it had secured two contracts from European NATO members for mechanical and electronic fuzes, with a combined value in the high double-digit millions of euros. Deliveries under these contracts are slated to begin later this year, according to the company, while some reports have placed the start for certain shipments in 2026. The orders fit snugly into CSG’s broader strategy of vertical integration, which also includes ramping up heavy-calibre shell production to 850,000 units annually by the end of 2026. A new Slovak line for long-range ammunition with a capacity of 70,000 rounds is already running at full utilisation now.

The operational picture is robust. First-quarter revenue reached €1.544 billion, up 13.8 percent year on year, and net profit surged 83 percent to €299 million. The net margin improved from 12 to 19 percent in the same period. Defence Systems, the core segment housing the fuse strategy, generated €1.251 billion in revenue (up 26.5 percent) and an operating EBIT of €356 million, translating to a margin of 28.4 percent. The group’s order backlog stood at €17 billion at the end of March, with a further €27 billion under negotiation. For the full year, management is sticking to its revenue target of €7.4–€7.6 billion, an operating EBIT margin of around 24–25 percent, an investment ratio of roughly 8.5 percent of sales, and net debt below 1.3 times EBITDA.

Yet the share price continues to ignore all of this. On Friday, the stock closed at €15.30, down 2.30 percent on the day and 15.30 percent for the week. That leaves it 57.57 percent below the January high of €36.05 and 22.20 percent beneath the 50-day moving average of €19.92. Technical indicators add to the bearish narrative: the relative strength index is at 34.5, and 30-day annualised volatility has hit 78.45 percent. The stock has rebounded 14.74 percent from its 52-week low of €13.65, but that hardly reverses the damage.

The disconnect between operating momentum and market sentiment is striking. CSG is deepening its control over critical inputs, securing long-term revenue from NATO customers, and posting steep profit growth. Yet the secondary market remains sceptical, punishing the stock week after week. The next milestone is the half-year report due on 7 August, when investors will scrutinise cash flow and whether the fuse orders and margin improvement are translating into sustainable operational dynamics. For now, the fuse factory and the new contracts are a strategic win on paper – but the market wants proof in deliveries.