Czechoslovak Group (CSG) reported that its shares fell as much as 23% on Wednesday before narrowing to a 16.7% decline, following a revision of its 2026 profit margin forecast to around 21% from the previously expected 24‑25%. The margin downgrade was attributed to a strategic shift toward long‑range ammunition and the ramp‑up of lower‑margin vehicle programmes. CSG noted that demand has moved toward long‑range ammunition, prompting the company to accelerate sales of standard‑range ammunition from inventory at lower market prices than in prior periods. It also expects strong growth in its Land Systems segment towards year‑end, where margins are still building as programmes ramp up.
The Land Systems division reported an operating margin of approximately 15.5% in the first nine months, compared with a 27.9% margin for the broader Defense Systems business. CSG now anticipates net working capital – which includes inventory and supplier advances – to be below 35% of revenue in 2026, a revision from its earlier guidance of below 20%. Net working capital currently stands at €2.95 billion, representing 42.0% of revenue over the past twelve months, up from 33.2% a year earlier.
The company maintained its 2026 revenue outlook of €7.4 billion to €7.6 billion, incorporating roughly €300 million of revenue shifted from the third quarter to the fourth quarter. Third‑quarter revenue declined 11.7% to €1.51 billion from €1.71 billion a year earlier, a drop the company linked to delivery timing issues, particularly in Land Systems. Operating profit fell 20.9% to €317 million from €401 million, yielding a margin of 21.0% as lower‑priced inventory sales weighed on earnings.
For the first nine months, revenue rose 6.1% to €4.76 billion, while operating profit increased marginally by 0.4% to €1.10 billion. The operating margin for this period was 23.1%, down from 24.5% a year earlier. Pre‑tax operating cash flow was negative €200 million for the nine‑month window, an improvement from a negative €801 million a year prior, with the company attributing the higher working capital to inventory stockpiling.
Net debt increased to €4.32 billion from €3.00 billion at the end of December 2025. Net debt to operating earnings over the past twelve months rose to 2.4 times, or about 1.6 times when excluding €731 million invested in joint ventures and strategic stakes and €700 million in financing to key suppliers. The order backlog reached a record €18 billion, up from €15 billion at the end of December 2025.
CSG reaffirmed its medium‑term guidance and confirmed that in‑house production of long‑range ammunition remains on track for completion by the end of 2027.