CSG’s Two-Front Push: KNDS Takeover Gamble Meets a Cooling Munitions Pipeline
27.05.2026 - 10:33:02 | boerse-global.de
The Czechoslovak Group is making a bold play for a stake in the maker of the Leopard 2 tank, even as the flagship Czech-led artillery initiative for Ukraine hits the brakes. The dual narrative says much about the company’s ambition and the risks that continue to cap its stock.
CSG has submitted a cash offer to buy the German half of KNDS, the Franco-German defence giant behind the Leopard 2. KNDS is equally owned by French state interests and German private investors. The timing is hardly coincidental — the group is preparing a July initial public offering pitched at a valuation of €15bn to €20bn. Market watchers give the takeover little chance of success. Political opposition in both Paris and Berlin is expected to block any deal that shifts ownership of a strategic tank manufacturer into Czech hands.
Meanwhile, the munitions supply chain CSG depends on for its own growth is showing signs of strain. The Czech government’s initiative to supply Ukraine with large-calibre shells has secured contracts for just one million rounds this year, down from 1.5 million in 2024 and 1.8 million in 2025. Around 500,000 shells have been delivered since January, with the rest due by December. The number of donor countries has slumped from 18 to nine, and almost €1bn in funding is confirmed for 2026 — but any extra volumes depend on fresh backers or tapping the EU’s €90bn credit line. Premier Andrej Babiš has publicly questioned the initiative’s transparency.
Should investors sell immediately? Or is it worth buying CSG?
For CSG, large- and medium-calibre ammunition is a core growth engine. The company itself is ramping up output: its own production of large-calibre shells should hit 850,000 units by year-end, supplemented by 400,000 from reactivated lines. First-quarter numbers underscore the momentum. Revenue climbed 13.8% to €1.544bn, driven by a 26.5% surge in defence sales. Operating EBIT rose 8.7% to €372m, holding the margin at 24.1%. The order backlog swelled 15.1% to €17bn, with another €27bn in the negotiation pipeline.
Capacity expansion continues alongside the order book. On 22 May, CSG sealed a 25-year joint venture with South Africa’s Reunert to manufacture electronic fuses for large-calibre ammunition in Slovakia. In Greece, 155mm production is already running at the Lavrio plant, with base-bleed propellant output set to start in the second half of the year. New factories for 5.56mm ammunition and a propellant plant in Slovakia are also being built. The investment rate is running at roughly 8.5% of revenue.
The financial targets for the full year remain unchanged: revenue between €7.4bn and €7.6bn and an operating margin of 24% to 25%. Net debt is expected to stay below 1.3 times EBITDA.
The stock has yet to reflect the operational strength. Trading at around €18.98 on the Prague exchange, shares sit 44% below their 52-week high of €33.81. The 30-day volatility is a punchy 75.6%. A recovery from the year’s low of €15.73 has brought a 20% gain since the start of May, but political uncertainty — from the stalled munitions initiative to the improbable KNDS gambit — continues to keep buyers cautious. The next catalyst is likely to come from Brussels or Prague: fresh funding commitments for Ukraine’s artillery needs will determine whether CSG’s own production growth translates into realised profits.
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