CSG Fends Off Short-Seller Attack With Strong Q1, but Ammo+ Margins Remain a Weak Spot

CSG reports €1.544bn revenue, 24.1% margin, and €17bn backlog; Ammo+ unit weakens but government pivot aids; short-seller allegations disputed.

The Czechoslovak Group is proving that its first public earnings report packs more firepower than a short-seller’s dossier. Just days after Hunterbrook Media launched a second salvo alleging over-reliance on a single Indonesian intermediary, CSG delivered first-quarter numbers that sent its shares sharply higher and pushed the stock more than 19% above the 52-week low hit during the initial attack in early May.

Revenue for the three months ended March came in at €1.544bn, up 13.8% from a year earlier, while operating EBIT reached €372m — translating to a margin of 24.1%, squarely inside the full-year target range of 24% to 25%. The defence systems division, which supplies medium- and large-calibre ammunition and armoured vehicles, surged 26.5% to €1.251bn. The group’s order backlog swelled to €17bn, a 15.1% increase driven by land-vehicle contracts, and the negotiation pipeline now stands at €27bn. Jefferies described the performance as solid, noting that revenue growth and margins were in line with guidance.

Yet beneath the headline strength, one division remains under scrutiny. The Ammo+ unit — CSG’s civilian ammunition business, which draws 80% of its revenue from the US and 82% from retail customers — posted sales of just €291m and an operating margin of 4.3%. The consumer market in the US was sluggish for most of the quarter, and only in February and March did demand and pricing begin to stabilise, with March margins reportedly returning to 2025 levels. Management has added staff and production capacity to capture the upturn, but the unit remains the clearest drag on an otherwise robust group performance.

To offset that vulnerability, The Kinetic Group — CSG’s Ammo+-focused subsidiary — has been deepening ties with institutional clients. The company expanded its ammunition supply relationship with the FBI and boosted production of 5.56mm rounds for US defence and law enforcement agencies. That pivot toward government customers, while still small relative to the civilian channel, could lend more structural stability to what has historically been a volatile revenue stream.

The Hunterbrook distraction has not gone away. On 18 May, the short-seller published “CSG: The Indonesia Problem,” alleging that orders worth up to $2.8bn — roughly a fifth of the total backlog — were being channelled through a single Indonesian intermediary called Republikorp. CSG dismissed the claims, pointing to the firm’s disclosed short position and accusing the report of selective interpretation of public data. Southeast Asia accounted for only around 2.5% of group revenue in 2025, and the company reiterated that it is a long-standing strategic region. Formal responses from Republikorp and the Indonesian government have not yet emerged.

Despite the controversy, the stock has recovered from its trough. After plunging roughly a quarter in early May to a 52-week low of €15.73, the shares now trade at €19.42 — still 43% below the January high of €33.81, but showing that the Q1 numbers have bought the company some breathing room.

The broader macro backdrop provides additional tailwinds. Europe’s SAFE instrument has earmarked up to €150bn for joint defence procurement, the EU has agreed a €90bn credit package for Ukraine in 2026 and 2027, and NATO’s 2%-of-GDP spending target remains intact. For a munitions maker with a strong defence orientation, the structural support is clear.

CSG has left its full-year forecast unchanged: revenue between €7.4bn and €7.6bn, an operating EBIT margin of 24% to 25%, and net debt below 1.3 times EBITDA by year-end. The next hard data point will come on 7 August with half-year results. By then, investors will want to see whether Ammo+ can sustain its improvement — and whether the Indonesia questions fade or gain traction.