Since the beginning of 2024, a joint team of the Ministry of Defence of the Czech Republic, its agency AMOS and leading Czech defence industry firms, which includes CSG companies, has been working intensively on the implementation of the so-called Czech Ammunition Initiative, which has and always had the primary objective of quickly securing as much artillery ammunition as possible for Ukraine, the absence of which, especially in early 2024, had a key impact on the advance of Russian forces in eastern Ukraine. It should be pointed out that our companies within the framework of the Ammunition Initiative have been fulfilling their commitments even in advance and in quantities that have had and are having a major impact on improving the situation in terms of ammunition availability.
Recently, however, the Czech Ammunition Initiative has become the subject of media attacks based on half-truths and information taken out of the overall context. The CSG is as transparent as possible towards the Ministry of Defence within the framework of the Initiative, but cannot publicly disclose the details of individual transactions for security reasons. However, we now feel the need to make an exception to our natural caution and restraint in disclosing information and respond to the media attacks mentioned above.
The authors of the media attacks are operating with non-public material leaked from Ukraine, which, as far as we know, has been intentionally spread since March this year, not long after the Czech ammunition initiative was announced. We are aware of several specific cases in which these documents have been gradually passed between top Czech officials since March of this year, circulated among some Czech defence industry companies, and offered to some journalists in the Czech Republic and Ukraine for publication at least in the last 3 months.
The documents present the price of a Turkish ammunition manufacturer at USD 2700 per 155 mm HE grenade. This is contrasted with the price of 3200 EUR at which this grenade was to be supplied to Ukraine under the Czech ammunition initiative. From the difference it is then inferred that this is the profit margin that the supplier, a private company operating under the Czech Ammunition Initiative, has. This is, of course, nonsense, for the following reasons:
1) First of all, the published document is obviously an indicative offer, and in no way the final conditions for the supply of ammunition.
2) The document contains the abbreviation EXW, which expresses that it is the so-called price at the manufacturer's warehouse, i.e. without loading, manipulation, transport, insurance, guarding and all other related costs associated with delivery to the final destination, which is not and has not been a warehouse in the Czech Republic.
3) This transport is done by trucks, by boat, then on rails with several transshipments, accompanied by very strong security measures and accompanied by a paid security service. The overall logistical management of any such transaction is extremely challenging.
4) Another item that is not provided by the contractor is packaging materials and containers, which also have to meet special requirements for the transport of ammunition and remain the property of the Armed Forces of Ukraine after the delivery of the ammunition.
5) There are other related costs, the details of which cannot be disclosed for obvious reasons, including the cost of replacing certain components of the ammunition with newly manufactured components.
6) In the light of the above mentioned points, the claim that the supplier's margin is EUR 500 is completely false and fabricated. Of course, a profit is made on the delivery, but it is substantially lower and entirely within the limits of what can be described as a reasonable profit.
7) From the evidence above, it is also clear that the Czech company, a participant in the ammunition initiative, is certainly not a mere intermediary or reseller, but provides a highly complex service with considerable added value, using its long-established know-how in the field of trade in military material.
The media attacks on the Czech Ammunition Initiative, which are based on distorted information and claims by people who are not qualified in this field, clearly help the Russian aggressor, undermine Ukrainian defence and, last but not least, damage the reputation not only of the Czech defence industry but also of the Czech Republic. We think that the topic described and explained above is certainly not the last information operation of this kind. We therefore appeal to the media to approach information that sensationally scandalises the Czech munitions initiative with the utmost caution.
Finally, we would like to point out that the only real solution to the dismal situation in the supply of large-calibre ammunition not only for Ukraine but also for NATO member states is to increase European production capacity. This will bring much-needed price stability for this strategic commodity. CSG is working hard to expand production capacity in several European countries in close partnership with other major European defence companies and governments.
About CSG
The global industrial-technology group CSG, owned by Czech entrepreneur Michal Strnad, has key manufacturing plants in the Czech Republic, Slovakia, Spain, Italy, India, Great Britain, and the USA and exports its products all over the world. CSG continuously invests in the development of its companies and at the same time expands in its core businesses. The group includes, for example, the Czech vehicle manufacturer Tatra Trucks, the world's leading manufacturer of small-calibre ammunition Fiocchi and the Czech radar manufacturer Eldis. More than 10,000 employees work in the companies integrated into the CSG Group and in the linked companies. In 2023, the group's consolidated revenues reached EUR 1.73 billion. CSG's main fields of expertise are engineering, automotive, railway, aerospace, defence and small calibre ammunition production. Thanks to its strong pro-export orientation, CSG products can be found on all continents.
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