CSG’s Net Profit Surges 83% and New Fuse JV Aims to Cement European Munitions Autonomy

Czechoslovak Group posts 83% net profit jump, launches electronic fuses JV with Reunert, but stock drags on Hunterbrook short-seller allegations.

Few European defence contractors have matched the Czechoslovak Group’s dual-speed push to lock in both industrial capacity and financial firepower. The company is adding a critical link to its supply chain with a Slovak-based joint venture that will produce electronic fuses for large-calibre ammunition, while its maiden quarterly report as a listed entity revealed a sharp rise in net earnings. Yet the stock remains weighed down by a persistent short-seller overhang and volatility that has kept the shares deep in the red from their January peak.

CSG and South African industrial group Reunert have set up a joint venture named Fuchs Electronics Europe, with Reunert holding 51% and CSG the remainder. Production will launch at CSG’s existing site in Dubnica nad Váhom, Slovakia, harnessing infrastructure already in place. Electronic fuses are the precision components that govern the exact moment of detonation for artillery shells, and their local manufacture strengthens Europe’s ability to source munitions without relying on external suppliers. Jan Marinov, head of CSG’s defence division, described the move as a significant upgrade to the group’s portfolio. The venture begins with a binding initial order that covers the start-up phase, and CSG says margins should become attractive once production is running at full tilt.

The quarterly numbers released on 20 May give a deeper view of the financial engine that will support that expansion. Revenue climbed 13.8% to €1.544bn in the first quarter, while net profit jumped 83% to €299m. The Defence Systems segment — the group’s core artillery and armour business — delivered €1.251bn in revenue, up 26.5% year-on-year, with an EBIT margin of 28.4%. The order backlog swelled 15% to €17bn, and the pipeline of additional contract opportunities stretched to €27bn. Management reaffirmed its full-year guidance for revenue between €7.4bn and €7.6bn and an operational EBIT margin of 24% to 25%, underpinned by surging NATO demand and the EU’s €90bn credit facility for Ukraine, which is expected to accelerate order flow.

The picture is less rosy in the Ammo+ small-calibre segment, where revenue came in at €291m and the operating margin slipped to a thin 4.3%. Weakness in the US commercial channel and heavy investment in capacity expansion squeezed profitability. However, demand began to improve from the end of the first quarter, and higher prices are supporting a recovery. CSG is also expanding its 5.56mm production line to meet additional orders from US government agencies, including the FBI, and expects both revenue and margin to strengthen as the year progresses.

That operational progress has been overshadowed by the unresolved clash with Hunterbrook Media, the short-seller that published allegations in early May accusing CSG of merely refurbishing old ammunition rather than manufacturing new rounds, and questioning the transparency of its January initial public offering. CSG fired back with two formal rebuttals, accusing Hunterbrook of cherry-picking public information to support a short position. To back up its claims, CSG disclosed it produced roughly 630,000 rounds in-house in 2025, with a medium-term target of 1.1m and a planned 20% increase in output next year from facilities in Slovakia, Greece, Serbia, Spain and India. The debate has not been settled; no independent verification has yet emerged.

Despite the earnings beat and the strategic JV, the stock has been unable to shed its volatility. The shares dipped 3.81% to €18.66 on the day the joint venture was announced, and the annualised volatility stands at a staggering 77.5%. Even after a 16% weekly gain, the stock trades at €18.97 — more than 44% below the 52-week high of €33.81 hit just after the IPO in January. On a monthly basis it still shows a 7% loss. Analysts, however, remain bullish: ten buy ratings with no sell recommendations, a consensus target of €32.85, and the highest forecast at €42. Moody’s upgraded CSG’s secured debt to Baa3, while Fitch affirmed its BBB- rating with a stable outlook. The next major catalyst will come in August, when the half-year results are due.