Slovak Arms Industry Posts Fastest Growth Since Ukraine War Began

Slovakia's defense manufacturing sector is growing at its fastest pace since Russia's full-scale invasion of Ukraine began in 2022, with expansion now spreading beyond the country's largest producers to mid-sized firms as well. Companies such as Kerametal, Glock's Slovak operations, ZTS Špeciál, and CSM Industry — all mid-tier defense manufacturers — recorded significant revenue increases last year, joining the larger arms producers that had already been benefiting from surging demand driven by the war in Ukraine. Smaller firms in the sector have fared less well, however, with several slipping into losses. While overall revenue growth in the Slovak arms industry accelerated in 2023, profit growth slowed, pointing to a squeeze on margins that is beginning to weigh on the sector. The divergence suggests that while demand for Slovak-made defense equipment remains strong — fueled by NATO rearmament efforts and orders linked to the conflict in neighboring Ukraine — rising production costs are eating into earnings. Slovakia, a member of both the European Union and NATO, has a long industrial tradition in arms manufacturing dating back to the communist era, when its factories produced weapons for Warsaw Pact countries.