CSG’s Diversification Push and Record Backlog Do Little to Halt the Stock’s Slide

Czechoslovak Group expands into chemicals with Alzchem stake, eyes €17B backlog, yet shares slide 60% from highs. Investors await half-year results.

The Czechoslovak Group (CSG) is expanding its industrial footprint on multiple fronts, yet the market continues to punish the stock. Shares slipped nearly 2% to €14.55 on Tuesday, leaving the defence and engineering conglomerate trading roughly 60% below the 52-week high it hit in January and 21% below its 50-day moving average.

The latest move came as the Czech holding raised its stake in German specialty chemicals group Alzchem to 20%. The acquisition signals a deliberate push beyond defence and machinery into chemicals – a sector CSG views as a lucrative base for diversifying across European markets. The timing underscores a dual strategy: while the company’s core defence unit churns through a €17 billion order book, it is also actively building positions in adjacent industries.

A string of recent operational milestones has failed to sway investors. In early June, CSG announced two large contracts – each in the high double-digit millions – to supply ammunition fuses to European NATO nations, with deliveries starting this year. The group is also ramping up production capacity. A joint venture with South Africa’s Reunert, Fuchs Electronics Europe, is being set up in Slovakia to strengthen supply chains for large-calibre ammunition. By year-end, CSG aims to produce 850,000 rounds of such munition, having already reached an annualised capacity of 800,000 in the first quarter.

The operational numbers look solid. First-quarter revenue rose nearly 14% to €1.54 billion, while operating profit climbed to €372 million. Management has reiterated its 2026 targets: sales of up to €7.6 billion and an operating margin of around 24%. The order backlog stood at €17 billion at the end of March, with additional projects worth double-digit billions in negotiation.

Next week, CSG will showcase a raft of new weapon systems at the Eurosatory defence exhibition in Paris, running from June 15 to 19. Among the highlights is the CFL-120 Karpat, a medium tank developed with Turkish manufacturer FNSS and featuring a Leonardo turret with a 120 mm cannon. Other exhibits include Eldis Pardubice’s software-controlled airport radar systems, Excalibur Army’s NATO-compatible DITA and MORANA howitzers, and technology from AviaNera Technologies. The show is seen as a key industry barometer and a chance for CSG to demonstrate its growing portfolio.

Investors will get the next hard data on August 7, when CSG publishes its half-year results. Until then, the downward price trend dominates, leaving the gap between the company’s operational strength and its stock valuation as wide as ever.