Czech arms group CSG plans to boost Kinetic's military ammo sales

By Jan Lopatka

PRAGUE (Reuters) - Czechoslovak Group (CSG) will seek higher military sales at U.S. small-calibre ammunition maker Kinetic after completing a $2.2 billion takeover last month, a board member told Reuters.

CSG, owned by Czech billionaire Michal Strnad, has grown fast as militaries in NATO countries, Ukraine and elsewhere buy more artillery ammunition, artillery and rocket-launcher systems, trucks, refurbished tanks, as well as hi-tech equipment.

CSG, whose revenues jumped by 129% in the first nine months of 2024 to $2.52 billion on the back of soaring demand, bought Kinetic from Vista Outdoor in an all-cash deal in November.

The acquisition boosts CSG's small-calibre ammunition business with brands including Federal, Remington, Speer and HEVI-Shot. It also delivers about $1.5 billion in annual sales and more than $416 million in earnings before interest, tax, depreciation and amortisation in the fiscal 2024, CSG said.

David Stepan, CSG board member and CEO of its Ammo+ division, said the company would take advantage of its existing footprint and European presence to add customers for Kinetic.

"The largest opportunity is in the military segment, that was a wholly fringe interest for Kinetic," Stepan told Reuters, adding: "There is opportunity stemming from our partnership with NATO and NATO-allied countries and beyond."

Kinetic's focus on non-military ammunition was partially due to it formerly being part of a publicly-listed company, a limitation that private ownership removes, Stepan said.

CSG was happy to retain Kinetic's management, which has been delivering EBITDA margins above rivals of 20-25%, he added.

Stepan said CSG was not planning to lay off any Kinetic's 3,800 staff, while existing spare capacity offered room for growth without making any major investments.

In 2022, CSG acquired Italy's Fiocchi Munizioni, which already has operations in the United States.

(Reporting by Jan Lopatka; Editing by Alexander Smith)