CSG Stocks Record Orders and a New Artillery Fuse JV, but the Market Isn't Biting

Czechoslovak Group shares fall as firm unveils joint venture with Reunert for electronic fuzes, posts record order backlog of €17B and 83% net profit jump.

The Czechoslovak Group has followed up its first quarterly earnings as a listed company with a fresh strategic move, yet investors remain wary. Shares in the Czech defence manufacturer slipped 4.12 percent to €18.60 on Friday, even as the company unveiled a joint venture to produce electronic fuzes for large-calibre ammunition and confirmed net profit had surged 83 percent.

At the heart of the new tie-up is Fuchs Electronics Europe, a joint venture formed with South Africa’s Reunert Group. Reunert will hold 51 percent, CSG the remaining 49 percent. The partners will repurpose CSG’s existing Slovak plant at ZVS Dubnica nad Váhom to produce electronic fuzes for 155 mm artillery shells — the "brains" that precisely control detonation timing. CSG gains greater independence in its supply chain: Reunert supplies the know-how, while CSG provides the manufacturing footprint and handles regulatory approvals.

The venture is not yet binding. It requires clearance from competition and arms-control authorities before it can proceed. A firm initial order, however, already covers the first three years of the ramp-up phase, giving the project a cushion until it is expected to turn profitable. Once operational, the factory will also supply other European ammunition makers.

The deal arrives as CSG’s production lines run at full tilt. First-quarter revenue climbed to €1.544 billion, a 13.8 percent year-on-year increase, while net profit jumped to €299 million — an 83 percent leap. The company’s order backlog hit a fresh record of €17 billion, up 15 percent, and the broader pipeline of pending contracts stands at an additional €27 billion. Management confirmed the full-year outlook: revenue between €7.4 billion and €7.6 billion in 2026, with an operating EBIT margin of 24 to 25 percent.

Defence Systems, the core segment, delivered €1.251 billion in revenue, up 26.5 percent, and an operating margin of 28.4 percent. The Ammo+ segment, which makes small-calibre ammunition, was a weaker link: revenue of €291 million and a thin 4.3 percent margin, hit by sluggish demand in the US commercial channel and heavy investment in capacity expansion. The picture improved towards the end of the quarter, and CSG is ramping up 5.56 mm production for US government clients including the FBI, expecting higher revenue and margins later in the year.

Self-produced ammunition volume reached around 630,000 rounds in 2025, and CSG aims to increase that by roughly 20 percent in 2026, en route to a medium-term target of 1.1 million rounds. The new fuze joint venture is explicitly designed to support that growth by securing a critical component for artillery shells, which are driving much of the expansion. Europe’s insatiable demand for munitions, fuelled by NATO rearmament and a €90 billion EU credit facility for Ukraine, underpins the order flow.

Not everything has gone smoothly. In early May, short-seller Hunterbrook Media published allegations that CSG merely refurbishes old ammunition rather than manufacturing new rounds, and questioned the transparency of its January IPO. CSG issued two formal rebuttals, accusing Hunterbrook of cherry-picking public data to support a short position. The company’s own production figures and the new joint venture are partial counters, but an independent review has not been conducted, and the dispute remains unresolved.

Despite the controversy, analysts remain bullish. Ten of them rate the stock a Buy, with no Sell recommendations. The average price target is €32.85, and the highest stands at €42 — implying nearly double the current share price. Credit rating momentum is positive: Moody’s upgraded CSG’s secured debt to Baa3, while Fitch affirmed its BBB- rating with a stable outlook.

Yet the market mood is cautious. At €18.97, the stock trades 44 percent below the January all-time high of €33.81. Friday’s decline saw the shares give back some of the 13 percent surge triggered by the Q1 release earlier in the week. On a weekly basis the stock is still nearly 16 percent higher, but monthly it is down roughly 7 percent. The next major checkpoint comes in August, when CSG will publish its half-year results — and investors will get a clearer view of whether the strategic steps, from the fuze joint venture to the expansion of small-calibre capacity, can close the gap between operational strength and market sentiment.