CSG lowers its 2026 operating EBIT margin target to around 21%, versus 24% to 25% previously targeted
On 11 November 2026, CSG revised downward its operating EBIT margin target for fiscal year 2026 to around 21%, compared with 24% to 25% previously. Over nine months, the adjusted operating EBIT margin declined by 1.4 points to 23.1%, while revenue rose 6.1% to €4,761 million.
The third quarter concentrates the turnaround: sales fell 11.7% to €1,510 million, and adjusted operating EBIT fell 20.9% to €317 million. The defense group, however, maintains its annual revenue target of between €7.4 billion and €7.6 billion, which includes approximately €300 million of revenue shifted from the third to the fourth quarter.
Standard ammunition destocking and business mix weigh on margin
Over nine months, adjusted operating EBIT is nearly flat (+0.4%), at €1,102 million compared with €1,097 million a year earlier, on a 2025 basis restated for purchase price allocation effects. It is therefore growing more slowly than sales.
The group cites two causes: the accelerated sell-off of its standard-range ammunition stocks at market prices lower than in past periods, as demand shifted toward long-range ammunition, and the growing weight of Land Systems.
This vehicle business posts an operating EBIT margin of around 15.5%, compared with 27.9% for the Defence Systems division as a whole, as its programs are still ramping up production.
Chairman and CEO Michal Strnad referred to “a temporary and negative effect on our margins” linked to the sale of these stocks “at lower market prices”.
Further down the income statement, net income from continuing operations, by contrast, rose 40.9% to €721 million. The gap with EBIT is due to the financial line: net financial expense fell from €372 million to €176 million over the period.
Ammunition and Land Systems up over nine months, down in the third quarter
Defence Systems, which accounts for 80% of revenue, grew 9.5% over nine months to €3,793 million. Medium- and large-caliber ammunition rose 10.3% to €3,034 million, and Land Systems rose 15.8% to €678 million.
In the third quarter alone, the trend reverses: ammunition fell 7% and Land Systems fell 35% to €233 million.
The group attributes this to longer manufacturing lead times in these two businesses, which push revenue into the fourth quarter and into 2027. Quarterly revenue thus came in below the €1.72 billion estimate from the only analyst covering the company before publication.
The picture is the opposite for Ammo+, the small-caliber ammunition division (20% of sales). Its revenue fell 4.7% over nine months to €971 million, but rose 11.1% in the third quarter to €340 million, driven by the recovery in US commercial demand.
Its quarterly operating EBIT rose from €14 million to €28 million, for a nine-month margin of 8.1%.
Record backlog at €18 billion, debt raised to 2.4 times EBITDA
The order backlog reaches €18 billion at the end of September, compared with €15 billion at the end of December 2025, of which 57% relates to Land Systems, versus 46% at mid-year.
In the third quarter, order intake (approximately €0.9 billion) remained below recognized revenue (€1.5 billion). Backlog and projects under negotiation total €47 billion, compared with €46 billion announced on 7 August 2026.
Net working capital reaches €2,949 million, or 42.0% of trailing twelve-month revenue, compared with 33.2% a year earlier.
As some deliveries slip into 2027, the group now targets less than 35% of revenue at the end of 2026, versus less than 20% previously. Pre-tax operating cash flow remains negative over nine months (-€200 million, compared with -€801 million), but turns positive for the third quarter alone (€211 million).
Net debt rises from €3,004 million at the end of 2025 to €4,320 million, or 2.4 times trailing twelve-month operating EBITDA, compared with 1.6 times at mid-year, when the group had targeted 1.3 times at year-end.
Excluding €731 million invested in joint ventures and holdings and €700 million of financing granted to subcontractors, the adjusted leverage would be approximately 1.6 times.
CSG also refinanced its main bank facilities in July, for €3,062 million, with a cost reduced by 125 to 150 basis points and a maturity extended to six years. The annual revenue target remains consistent with the €7.5 billion indicated in March 2026 and with the consensus of €7.55 billion.
Finally, the group confirms its medium-term financial objectives, underpinned by fully integrated production of energetic materials by the end of 2027, which its chief executive presents as “our main lever for future margin growth”.
