Top 10 Defence Companies in Central Europe, 2022
The high growth of sales registered by local defence firms is driven by the war in Ukraine, growing defence budgets, and the military modernisation needs of NATO’s eastern flank nations.
Central Europe is largely undiscovered and neglected when it comes to the rankings of top defence firms. However, the ongoing war in Ukraine, the deteriorating security environment in the region, and the recent positive sales results of the local defence sector will generate interest in the capabilities offered by defence firms in the region. The after-mentioned insight is intended as an introduction to the discussion about the current performance of the local defence sector in NATO’s eastern flank countries (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Slovakia). The analysis covers the top 10 arms-producing companies in the region with their headquarters in Central Europe and owned by local capital that is either private or state-owned. The ranking only includes firms in which at least 50% of sales in 2022 were generated by defence and security contracts. Companies’ total sales revenues were taken as the main comparative indicator as the growing number of companies are reluctant to report the exact share of their defence production since the beginning of the war in Ukraine.
The combined sales of the top 10 defence companies in the region reached nearly $4.9 billion in 2022, which was an increase of 39.5% compared to $3.5 billion in 2021. The rising defence spending, multi-year modernisation programmes, war in Ukraine and consequently high demand for military armaments, ammunition, maintenance, repair, and overhaul (MRO) services translated into superior sales results for local companies. Nearly all of the analysed companies registered substantial growth in sales in 2022, which was even more impressive in local currency units (LCU). The only exception was Remontowa Shipbuilding whose total sales dropped in 2022, but according to the company’s board, sales in 2023 should be doubled in comparison to the previous year.
Table 1. Top 10 Defence Firms in Central Europe in 2022
The Polish Armaments Group (PGZ) is the largest Central European defence firm. This is the only company from the region which regularly appears in the top 100 defence firms rankings published by the Defense News website or the Stockholm International Peace Research Institute (SIPRI) think-tank. PGZ registered nearly $1.9 billion in total sales in 2022, a 13.9% growth compared to 2021. The Group is the biggest entity of the Polish arms industry bringing together more than 50 defence companies. The company is heavily engaged in the implementation of Poland’s ambitious defence modernisation agenda, specifically in the armoured vehicles and air defence sector but its presence on the international market is relatively modest.
Second in ranking is the Czechoslovak Group (CSG), which in a nutshell is the Czech equivalent of PGZ but privately owned and with a third of PGZ’s employees. CSG registered 60.2% year-on-year sales growth and $1.1 billion of total sales in 2022. The group is also a serious candidate to be listed among the top 100 defence companies next year due to its sales results in the defence segment. The ranking also confirms the competitiveness and international aspirations of Czech corporations. Four of them are within the top 10 in the region and Omnipol was very close to entering the top 10 ranking. The four Czech companies registered a total sales of $2.2 billion in 2022 a growth of 64.2% compared to the year before. The Czech defence firms are also among the most expansionist in the region. Recently, the companies acquired a few Western firms. In 2021, the Ceska Zbrojovka Group took over the American Colt Holding Company and changed its name to Colt CZ Group. Last year the company also completed the acquisition of Swedish Spuhr i Dalby AB company, a producer of optical mounting solutions for weapons. Meanwhile, CSG took over the Fiocchi Group in 2022. The Group is an Italian manufacturer of small-calibre ammunition with production facilities in Italy, the United Kingdom and the USA. The export orientation of the Czech firms is also a consequence of a relatively shallow local defence market as the Czech Ministry of Defence has been struggling to reach 2% of GDP on defence.
Chart 1. Revenue of Top 10 Defence Firms in Central Europe in 2022 (USD Millions)
The war in Ukraine and the high demand for ammunition, explosives and MRO services for armoured vehicles and artillery systems has had a direct impact on the exceptional sales growth of Romanian ROMARM and the Czech STV Group. The companies have registered a record high year-on-year sales growth respectively 413.8% and 336.6%. It is also expected that demand for ammunition and MRO services will also be noticeable in the financial results of local companies in the following years as the war of attrition in Ukraine continues.
Undoubtedly, 2022 was a very positive year for defence firms in Central Europe in terms of sales revenue. However, the companies had also to handle the challenges of growing inflation, labour shortages, and supply chain disruptions. The privately owned defence firms seem better adapted to operate in the current market environment by responding quickly in providing large volumes of defence goods, and both cooperate and compete with well-established Western competitors. Other companies in the region should use the period of boom for their products and services to implement the necessary adjustment measures to become more competitive in the global arms market for the future, and systematically move up the rankings for the top 100 defence firms.