CSG Shakes Up Management as €17 Billion Pipeline Fails to Lift Stock from Near-Year Lows

Defence contractor CSG hires top executives from Rheinmetall, Northrop Grumman to drive growth, but stock down 64% from highs as market awaits profit conversion.

The Czechoslovak Group (CSG) is betting on a sweeping overhaul of its leadership to convince investors that its growth ambitions are more than just a paper promise. The defence contractor has poached top executives from industry heavyweights including Rheinmetall, Northrop Grumman, BAE Systems and General Dynamics, placing them at the helm of its most critical divisions.

David Jacobs, a 15-year veteran of Northrop Grumman and Raytheon, takes charge of North American operations. His mandate is clear: accelerate expansion in the world’s largest defence market. Alongside him, Ben Hudson — recruited from Rheinmetall — assumes leadership of the Land Systems division and the role of chief technology officer. The message from management is unmistakable: CSG is no longer content to be a regional player.

The urgency of this personnel drive becomes clear when looking at the stock’s trajectory. CSG shares closed at €12.89 on Tuesday, a staggering 64% below the all-time high set in January. The decline has accelerated sharply, with the stock losing nearly a quarter of its value in the past 30 days alone. Technical indicators underline the severity: the share price sits well below the 50-day moving average of €16.37, and the relative strength index of 32.7 points to deeply oversold territory.

Investor scepticism persists despite a swelling order book. CSG currently holds firm orders worth €17 billion — a 15% increase from year-end — with a further €27 billion in projects under negotiation. Nearly half of that backlog is in land systems. Yet the market is demanding proof that this pipeline can be converted into reliable profits.

Tangible evidence of the growth story exists on the ground. In Iowa, CSG’s subsidiary MSM North America is building a $635 million artillery complex for the U.S. Army. The company has also expanded ammunition supply agreements with the FBI. These projects are central to CSG’s ambition to become a global defence force.

Operationally, the first quarter offered some reassurance. Revenue rose nearly 14% year-on-year to €1.54 billion. Earnings before interest, taxes, depreciation and amortisation (EBITDA) reached €411 million, while operating profit stood at €372 million — the difference reflecting higher depreciation and amortisation charges associated with the company’s rapid expansion.

That expansion, however, comes at a cost. CSG reported net debt of €2.23 billion, and net working capital of roughly €2.2 billion, as heavy investment in inventories and supplier commitments tied up significant cash. The new management team will need to address this cash drag if the group is to hit its 2026 targets: revenue of up to €7.6 billion and an operating margin of around 25%.

For now, the gap between CSG’s ambitious projections and its depressed share price remains wide. The leadership reshuffle is a clear attempt to convince the market that the company can manage its vast project pipeline profitably — but until cash flow stabilises, the pressure on the stock is unlikely to ease.