UPDATE 1-Czech group CSG’s profits soar on defence spending amid Ukraine war

(Adds revenue breakdown, production capacity, Fiocchi, Excalibur; paragraphs 5, 7, 11-14)

PRAGUE, April 10 (Reuters) – Czechoslovak Group (CSG) more than doubled its core earnings in 2023 on rising demand for military equipment, the defence and industrial manufacturer said on Wednesday.

The Czech maker of heavy military equipment and large-caliber ammunition, in demand due to the war in Ukraine, said increasing defence budgets provided potential for revenue growth in the coming years.

Its earnings before interest, tax and amortisation (EBITDA) jumped by 130% to 439 million euros ($476 million) on revenue up 71% to 1.73 billion.

It posted a net profit of 210 million euros, up 49%.

The company, which employs more than 10,000 at 37 sites in Europe and the United States, said defence accounted for more than 70% of its revenue.

Owned by Czech businessman Michal Strnad, 31, the company has been investing in ammunition production at its plants in Slovakia and Spain, and has played an important role in Western efforts to procure and supply military material to Ukraine.

Since Russia’s invasion of Ukraine in 2022, CSG has raised large-caliber ammunition production severalfold.

The company is also in the process of a $1.91 billion all-cash acquisition of the Sporting Products division of U.S.-based Vista Outdoor, since renamed Kinetic Group, which includes its guns and ammunition production business.

“The continuing Russian aggression against Ukraine resulted in a significant increase in defence spending in most European countries, especially in Eastern and Northern Europe,” CSG said.

“This is accompanied by greater pressure to expand production capacity and – given the high consumption of mainly large caliber ammunition and ground equipment – the need to replenish more rapidly the stocks of military equipment and materiel in the arsenals of NATO member states.”

CSG also makes self-propelled howitzers, multiple rocket launcher trucks and other heavy equipment, and has upgraded Soviet-era tanks and infantry fighting vehicles for shipments to Ukraine.

The firm said its Excalibur Army unit which makes and upgrades heavy military equipment has added 400 jobs last year, while the number of jobs at its artillery ammunitions division MSM Group had nearly doubled its workforce in the past 18 months, it said.

Apart from military sales, the company last year fully integrated Fiocchi Munizioni, a maker of small-caliber ammunition, mostly for civilian use, which it acquired in 2022.

CSG’s aerospace business which includes radar and security systems and airplane servicing also grew.

($1 = 0.9217 euros) (Reporting by Jan Lopatka; editing by Jason Hovet and Jason Neely)

(c) Copyright Thomson Reuters 2024. Click For Restrictions – https://agency.reuters.com/en/copyright.html