CSG half-year revenue beats estimates on strong ammunition demand

By Hugo Lhomedet and Jason Hovet

Aug 7 (Reuters) - Czech Republic-based defence firm CSG reported half-year revenue above market expectations on Friday, driven by strong demand for ammunition and a ramp-up in its land systems business.

The company's revenue came in at €3.3 billion ($3.8 billion), up just over 17% from a year earlier and beating the €3.14 billion expected by analysts in a company-compiled consensus.

Its core Defence Systems arm, which spans ammunition and armoured vehicles, grew 27%.

"Demand for our products remains robust and we have taken further strategic steps to launch new products and systems," CSG CEO and majority owner Michal Strnad said.

Shares in the group had risen 4.1% by 0804 GMT.

EUROPEAN GOVERNMENTS BUILDING STOCKPILES

CSG said demand for its ammunition remains strong as Ukraine shifts toward longer-range 155mm rounds, a category with few European producers, while European governments continue to prioritize stockpile replenishment and domestic production.

Operating profit came in at €784 million, up nearly 13% year-on-year and a slight beat to the €764 million expected by analysts, while its order backlog and pipeline grew to €46 billion from €44 billion in March.

The company confirmed its full-year targets, expecting revenue to reach €7.4 billion to €7.6 billion. Growth will be driven by the group's land systems and military & law enforcement ammunition units, it said.

CSG's own-production capacity for ammunition reached 850,000 rounds, it said, and was on track for a target of 1.1 million by the end of 2027.

'NO LONGER JUST AMMUNITION'

The group, whose shares debuted in Amsterdam this year, has been active in expansion, and Chief Financial Officer Zdenek Jurak told a call with media it was monitoring targets.

"If you look at the direction we are going, it is no longer just ammunition, it is not just ground equipment, but we are looking at high-tech things" like turbo jet engines, he said.

Asked about the Middle East conflict, Jurak said CSG had its supply chain secured and did not see an impact on production.

($1 = 0.8678 euros)

(Reporting by Hugo Lhomedet, Jakob Van Calster and Jason Hovet; Editing by Milla Nissi-Prussak and Jan Harvey)