CSG Outperforms Expectations With Strong Ammunition and Land Systems Revenue
CSG's Half-Year Financial Performance and Strategic Developments
By Hugo Lhomedet and Jason Hovet
Revenue Growth Surpasses Analyst Forecasts
Aug 7 (Reuters) - Czech Republic-based defence firm CSG reported half-year revenue above market expectations on Friday, driven by strong demand for ammunition and a ramp-up in its land systems business.
The company's revenue came in at €3.3 billion ($3.8 billion), up just over 17% from a year earlier and beating the €3.14 billion expected by analysts in a company-compiled consensus.
Its core Defence Systems arm, which spans ammunition and armoured vehicles, grew 27%.
CEO Statement on Strategic Progress
"Demand for our products remains robust and we have taken further strategic steps to launch new products and systems," CSG CEO and majority owner Michal Strnad said.
Shares in the group had risen 4.1% by 0804 GMT.
European Market Dynamics and Demand Drivers
Government Stockpiling and Ammunition Demand
EUROPEAN GOVERNMENTS BUILDING STOCKPILES
CSG said demand for its ammunition remains strong as Ukraine shifts toward longer-range 155mm rounds, a category with few European producers, while European governments continue to prioritize stockpile replenishment and domestic production.
Profitability and Order Backlog
Operating profit came in at €784 million, up nearly 13% year-on-year and a slight beat to the €764 million expected by analysts, while its order backlog and pipeline grew to €46 billion from €44 billion in March.
The company confirmed its full-year targets, expecting revenue to reach €7.4 billion to €7.6 billion. Growth will be driven by the group's land systems and military & law enforcement ammunition units, it said.
CSG's own-production capacity for ammunition reached 850,000 rounds, it said, and was on track for a target of 1.1 million by the end of 2027.
Expansion Beyond Ammunition
Diversification Strategy
'NO LONGER JUST AMMUNITION'
The group, whose shares debuted in Amsterdam this year, has been active in expansion, and Chief Financial Officer Zdenek Jurak told a call with media it was monitoring targets.
Focus on High-Tech and New Markets
"If you look at the direction we are going, it is no longer just ammunition, it is not just ground equipment, but we are looking at high-tech things" like turbo jet engines, he said.
Asked about the Middle East conflict, Jurak said CSG had its supply chain secured and did not see an impact on production.
Additional Information
($1 = 0.8678 euros)
(Reporting by Hugo Lhomedet, Jakob Van Calster and Jason Hovet; Editing by Milla Nissi-Prussak and Jan Harvey)