Czechoslovak Group (CSG), an industrial and technological holding, achieved the highest profit in its history in 2021. In comparison with 2020, the net profit increased by 44 percent to CZK 1.3 billion. EBITDA for 2021 reached CZK 2.7 billion, revenues reached CZK 14.4 billion. Six companies of the holding achieved a turnover in excess of CZK 1 billion. The Group, which is wholly owned by Czech entrepreneur Michal Strnad, was doing well in all pillars of its business, i.e., in the aerospace, defence, rail and automotive industries, in spite of the impact of Covid, supplier problems and energy price increases.
David Chour, Vice-Chairman of the Board of Directors and Director of Finance of CSG, comments on the CSG results: “We have managed to significantly increase CSG’s profitability, despite a certain revenue decline, which mainly resulted from the sale of a group of Mazda and Hyundai showrooms”.
In 2021, CSG also implemented its biggest investment to date: the purchase of a 49% minority ownership interest in DAKO-CZ from Tatravagónka. After this transaction, CSG became the 100% owner of a lucrative manufacturer of braking systems and components for rail vehicles, based in Třemošnice, which is the frontrunner of the entire Group in terms of economic results. In 2021, DAKO-CZ achieved revenues of CZK 1.56 billion and EBITDA of CZK 392 million. The company’s performance has been growing by approx. one fifth per year for three consecutive years, and this trend should also continue this year. Last year DAKO-CZ expanded outside its home in Třemošnice by establishing a branch plant in Ostrava.
As far as aerospace is concerned, the companies manufacturing radars (Retia, ELDIS) and companies developing software for flight operations management (CS Soft, ATRAK) also did well. An interesting thing that occurred last year was the success of the ReTwis portable radar, a product made by Retia, in the USA. The radar, which is to be used by special units to detect living entities behind a wall or a non-metallic barrier, was acquired by police forces in several American cities and federal security forces. Extraordinary results were achieved by JOB AIR Technic, a provider of aircraft repair services, which, at the time of the air transportation industry crisis caused by the pandemic, increased its revenues from CZK 659 to 796 million and EBITDA from CZK 76 to 111 million.
The strongest company in the defence segment was EXCALIBUR ARMY, the most important developer and manufacturer of special military ground force equipment in the Czech Republic. This company also grew year-on-year revenues from CZK 2.23 to 2.497 billion, and EBITDA from CZK 396 to 400 million.
The most important company of CSG is Tatra Trucks, a vehicle manufacturer, with an achieved turnover of CZK 5.3 billion and EBITDA of CZK 385 million last year. The results of this company, however, are not included in the accounting consolidation of CSG according to IFRS, because the Group does not hold a 100% ownership interest in it.
CSG also expects significant revenue and profit growth in 2022: “TATRA TRUCKS and our companies manufacturing military equipment and ammunition have taken part in the aid provided to defend Ukraine. In addition to this, we can expect orders from our domestic customer – the Army of the Czech Republic. Their requirements are always prioritised by our companies”, says David Chour.
The development of CSG results since 2015 is illustrated in the following table:
In 2021 the holding was divided into divisions, which also set the main directions in which the Czechoslovak Group will further develop. In addition to the Aerospace Division, other groups of companies diversified to form the Defence, Rail and Automotive Divisions. Those companies that do not belong to these divisions due to their expertise formed the Business Projects Division.
Eight key companies belonging to the CSG Aerospace Division generated revenues of almost CZK 4 billion and proved that, in this segment, CSG ranks among the strongest market players in the domestic market, in spite of the coronavirus pandemic, which hit the aerospace industry especially hard in 2020.
The biggest investment in 2021 was the purchase of a 49% ownership interest in DAKO-CZ from Tatravagónka. Another investment was focused on acquisition of the Prague Fertility Center. In 2021 several divestments also occurred, which concerned those companies with specialisations that were not aligned with the future direction of CSG’s business. These were namely Hyundai and Mazda showrooms, which were sold to the LOUDA Group, and Skyport, a specialist in aerospace logistics services at the Ruzyně and Bratislava airports that was sold to an international consortium.
The outlook for 2022 predominantly predicts the growth of CSG Defence Division companies in view of their involvement in the active aid provided to the Ukrainian Army and the required replenishment of Czech Army military equipment. The growth of the CSG rail pillar has continued, predominantly represented by DAKO-CZ in Třemošnice, which opened a new branch plant in Ostrava last year. This year CSG has been working on the implementation of an important investment in the EU territory, which could synergistically extend its portfolio in the area of the defence industry. The holding is also interested in the highly perspective area of drone development and manufacture.
CSG has also systematically resolved the area of research, development and innovations since 2021. In the CSG Aerospace Division, a certain percentage of EBITDA will surely be focused on innovative projects using advanced and breakthrough technologies. Research and development are also supported by the internal grant programme of CSG, thanks to which companies can start riskier innovations with a potential high return without negative effects on profitability.
In terms of ecology and carbon footprint reduction, Tatra is introducing a project for a vehicle powered by an electric motor that uses energy from hydrogen fuel cells. Its prototype should be presented at the end of this year. Another ambitious project is the production of pure hydrogen on the Tatra premises through the electrolysis of water using solar energy.
About Czechoslovak Group
CSG is an industrial and technological holding with development, manufacturing and commercial companies primarily focusing on the aerospace, automotive, defence and rail industries. Its best-known member is Tatra Trucks, a vehicle manufacturer based in Kopřivnice. CSG and its companies develop their activities in the field of social responsibility. This is focused on assisting disabled and senior citizens, supporting professional and amateur sports, Czech culture, technical education, museums and the non-profit activities of its employees. Important current projects in this area include, for example, sponsoring HC Sparta Prague, opening the new Museum of Trucks in Kopřivnice and the “Tatra to Schools” project, a part of which involves students assembling and putting a Tatra Phoenix vehicle into service. The holding is also active in the field of technologies that reduce carbon footprint and environmental impact. For this purpose, a heavy vehicle with an electric motor powered by hydrogen cells is being developed at Tatra, and a project involving large-scale hydrogen production from renewable resources is under preparation.