Defence Spending Hits Record $2.89tn, but CSG Stock Still Sits 45% Below High

Czechoslovak Group shares plunge 45% from 2025 peak even as world defence spending hits record $2.89T; Q1 shows defence systems strength but Ammo+ weakness.

Global military budgets have never been bigger. The world spent $2.89 trillion on defence in 2025, up 9.4% from the previous year — the sharpest increase since the Second World War. European outlays alone have ballooned 83% since Russia’s full-scale invasion of Ukraine began, and more than 100 nations have raised their military budgets over the past two years. NATO members now account for over 55% of global defence expenditure.

Against that backdrop, shares of the Czechoslovak Group (CSG) ought to be flying. Instead, they ended last Friday at €18.70, down 3.41% on the day and roughly 45% below their 2025 peak of €33.81. The stock sits 15% under its 50-day moving average of €21.90. Still, the week brought a 14.14% rebound from early-May lows, and the share price has clawed back nearly 19% from its recent trough.

CSG’s first-quarter numbers tell a tale of two businesses. Revenue climbed 13.8% to €1.544 billion, driven largely by defence systems, where sales jumped 26.5% on strong demand for medium and large calibre ammunition and land systems. Operating EBIT rose 8.7% to €372 million, pushing the margin to 24.1% — right inside management’s target corridor. The order book swelled 15.1% to €17 billion, and the negotiated project pipeline stood at €27 billion, giving the group enviable visibility.

The Achilles heel remains the Ammo+ division. Segment revenue slumped 20.5% to €291 million, dragged down by tough conditions in the US commercial market. Operating profit in the unit cratered 68.5% to just €13 million, a stain on an otherwise solid earnings picture. CSG is pouring investment into the segment nonetheless, including expanded capacity for 5.56mm ammunition destined for US defence and law enforcement agencies and a deepening supply relationship with the FBI. The company points to signs of a turnaround: demand improved markedly late in the quarter and pricing firmed. If that recovery materialises, the group’s full-year outlook — revenue of €7.4-7.6 billion and an EBIT margin of 24-25% — will look more comfortable.

Geographically, CSG is working to reduce its reliance on any single conflict zone. Some 64% of quarterly sales came from NATO countries, while the share generated in Ukraine declined. A recent contract for a multi-layered air-defence system in Southeast Asia, worth $2.5 billion, underscores the push into new regions. Two other geopolitical developments could further lift the order pipeline. India plans to open roughly 50% of its defence production to the private sector under its “Aatmanirbhar Bharat” programme, aiming for higher output and exports by 2029 while restricting thousands of import items. New Zealand, meanwhile, has brought forward a NZ$1.6 billion defence budget increase focused on maritime security and drones, with detailed procurement priorities expected when the official budget lands on 28 May.

CSG’s annualised volatility tops 77%, reflecting how jittery the market remains about a stock that carries both macro tailwinds and micro headwinds. The group has also had to parry allegations from short-seller Hunterbrook Media, issuing a detailed rebuttal of claims about its business model, production capacity, IPO disclosures and governance. With a strong backlog and a confirmed guidance range, the next quarterly report will show whether the Ammo+ rebound is real — or whether the upside from record global defence spending continues to be overshadowed by one weak segment.