Czechoslovak Group (CSG), the industrial-technology holding company owned by Czech entrepreneur Michal Strnad, has achieved an all-time record profit for 2022. CSG's sales rose 73 percent year-on-year to CZK 25 billion and EBITDA, including the 100 percent result of Italy's Fiocchi Munizioni (Fiocchi), even rose to CZK 7.4 billion. At the same time, in 2022 CSG made its largest acquisition to date: It bought a 70 percent stake in the Fiocchi Group, a major global player in small caliber ammunition.
David Chour, Vice Chairman of the CSG Board of Directors, says: "We can be pleased with our 2022 results. We were able to cope with inflation, energy prices and labour shortages and achieved a record result. But it did not fall from the sky: The Group has grown continuously since its inception its and the growth has been hard worked by our extremely active owner, management and all employees. Only thanks to this fact we have been able to eliminate the threats and seize the opportunities that 2022 has brought."
CSG has performed well in all of the industries in which it operates, with the majority of its businesses achieving highly positive earnings. For example, the TATRA TRUCKS automotive company, in which CSG has a 65 percent stake and 35 percent is held by PROMET GROUP, increased year-on-year sales from CZK 5.31 billion to CZK 7.46 billion and EBITDA from CZK 385 million to CZK 501 million. Revenues of the group of companies around parent DAKO-CZ, a manufacturer of braking systems for rail vehicles from Třemošnice, rose from CZK 1.57 billion to CZK 2.21 billion and EBITDA from CZK 385 million to CZK 544 million.
At the same time, in 2022, CSG made its largest acquisition to date: the purchase of a 70% stake in the Fiocchi Group, one of the world's largest manufacturers of small calibre ammunition. It produces ammunition in a total of five locations and three countries (Italy, UK, USA). However, the acquisition has a relatively low impact on CSG's 2022 results, as it was only settled in November and only a small part of last year's Fiocchi results is consolidated into CSG's holding results. "We therefore formally achieved an EBITDA of CZK 5.6 billion, but if we were to consolidate the full year's Fiocchi results, CSG's EBITDA would be another CZK 2 billion higher, at around CZK 7.4 billion," says David Chour, Vice Chairman of CSG's Board of Directors.
The change in the global security situation from February 2022 has obviously affected the interest in military hardware. As CSG companies are major manufacturers of ground equipment or artillery ammunition, they have registered a significant increase in demand. Currently, their production is sold out for several years ahead. Several companies (Czech Excalibur Army and Tatra Defence Vehicle, Slovak VOP Nováky, Spanish FMG) are investing billions of CZK in the construction of new halls and production lines. This is also linked to the creation of hundreds of new jobs.
Although it is known that some CSG companies are involved in deliveries to Ukraine, for security and strategic reasons, the Group does not disclose details on this topic, whether it is the financial volume of deliveries, the identification of the company involved, or, of course, the goods involved. "As far as defence supplies are concerned, our customer portfolio is widely diversified. A very important market for us is, for example, Southeast Asia, where we have projects for complex weapon systems with a value approaching CZK 50 billion," says David Chour, Vice Chairman of the CSG Board of Directors.
The group also points out that the performance of its defence part is not dependent on domestic contracts. David Chour states on this: "Although it may be surprising due to the public debate on the need for investment in defence, as of February 2022, the domestic customer, the Ministry of Defence of the Czech Republic, has not ordered any new weapon systems from our companies. Therefore, even in the current security situation, it is true that by 90 percent we are not fed by Czech public procurement, but by exports."
Last but not least, in 2022 CSG has reduced its debt, which fell from 2.2 to 2.07 multiple of EBITDA. The group is thus safely within the 3.5 multiple of EBITDA limit, which is considered to be the limit of healthy debt, and is counting on further investments and expansion. "We are currently negotiating acquisitions of companies in traditional NATO and EU countries that are comparable to or even outperform Fiocchi," says David Chour without further details.