Excalibur Army earns a margin most Czech companies never see

A margin that sets Excalibur Army apart

If you have seen footage of refurbished tanks, howitzers or military trucks heading east from Central Europe, some of them may well have passed through Excalibur Army. The Prague company buys, overhauls and sells military vehicles, artillery and ammunition. It is a spol. s r.o., the Czech equivalent of a limited liability company. In 2025 it booked revenue of CZK 83.2bn, up 26.4% from CZK 65.8bn a year earlier. The figures are for the company alone, not a wider group, under Czech accounting rules, in CZK for the calendar year.

The revenue is large. The profit is what stands out. Operating profit, what is left after paying for goods, staff and running the business but before interest and tax, reached CZK 16.3bn. That is an operating margin of 19.6%.

Set that against the 6 other Czech companies it is benchmarked against, and the contrast is stark. Their median operating margin in 2025 was 2.0%, which puts Excalibur Army 17.6 pp ahead. The comparison set is a mixed one. LEGO's factory in Kladno kept 3.3% of its sales as operating profit. The Strakonice brewery kept 0.7%. PETROF, the piano maker from Hradec Králové, ran an operating margin of -43.8%. Further down the income statement the picture holds: Excalibur Army's net margin was 15.0%, against a median of 0.9%.

None of these companies sells what Excalibur Army sells, so the gap says more about its market than about its management. Ordinary Czech businesses, from plastic bricks to beer, fight for a few percent. Excalibur Army works on a different scale of reward.

Why selling armour pays better than selling bricks

A margin far above other companies usually comes from one of a few places: pricing power, a niche with few competitors, a lighter cost base, or a business model that needs fewer assets. Excalibur Army appears to have several at once.

Start with the market. When armies need equipment quickly, they compete for the few suppliers who can deliver this year rather than in several years. Speed has a price, and the seller sets more of it. A company that holds stocks of older vehicles and ammunition, and knows how to bring them back into service, sells something a new factory cannot offer at any price: availability now.

Then the cost base. Refurbishing and trading is lighter on owned assets than building production lines from scratch. Depreciation, the annual cost of wearing out machines and buildings, was only CZK 97.7m in 2025, a sliver next to revenue of CZK 83.2bn. Revenue per employee was CZK 83.5m. That is close to the CZK 92.3m Grand Hotel Zvon in České Budějovice took in over the whole year, except that here it is generated by each person on the payroll.

The accounts do not break revenue down by customer or by contract. That split is the figure that would show whether the margin rests on a broad order book or on a handful of very large deals, and it matters more than any other for how durable the gap is.

The gap is already narrowing

The benchmark flatters Excalibur Army, but its own history is more sobering. In 2024 the operating margin was 21.8%. In 2025 it narrowed by 2.2 pp to 19.6%. Revenue rose 26.4%, operating profit only 13.5%. The company sold a lot more and kept a slightly smaller slice of each sale.

Part of it shows up in the workforce. Headcount rose from 694 to 996. Personnel cost per employee stayed flat at CZK 788k, so this was not a pay race. But revenue per employee fell 11.9%. Either the company hired ahead of the revenue those people will eventually bring, or the new work earns less per head than the old.

The cash line moved even more. Cash fell 85.5% to CZK 2.1bn at the end of 2025, from CZK 14.4bn a year earlier. Equity rose CZK 2.5bn to CZK 13.7bn, much less than the year's net profit of CZK 12.5bn. The accounts do not show here how much went to the owner and how much went into stock and unpaid invoices, and those are the figures I would watch. A business that earns this much on paper but ends the year with a fraction of the previous cash is either paying out generously or tying money up in the next round of deliveries.

What a wartime margin tells the rest of us

For the governments buying from Excalibur Army, the margin is the price of urgency. When the alternative is waiting years for new production, paying more for equipment that exists today can be the rational choice. It also means the customer, ultimately the taxpayer in several countries, carries a premium that would shrink in a calmer market.

For the market, a margin like this is an invitation. High returns tend to pull in new capacity, and each new production line competes for the same orders and, over time, for the same prices. The mild slip in 2025 may be nothing more than a bigger, more varied order book. It may also be the first sign that the seller's market is becoming a little less one-sided. A single year's accounts do not settle which.

Management says current contracts point to another record year in turnover, despite the risks it has identified, and it has assessed the effect of the conflict in the Middle East on its accounts. Record turnover is a statement about volume. The margin is the statement about bargaining power, and that is the line that will show whether the gap holds.

For anyone running a business, the useful exercise is simple. Put your own operating margin next to companies of your trade and size, then write down why yours is higher or lower. If the reasons are things you control, such as costs, know-how or a product others cannot copy, the gap can last. If the main reason is that customers currently have nowhere else to go, you are earning the market's margin, not your own.

Excalibur Army's accounts show a company earning exceptionally well from an exceptional moment. I would not read the gap to the benchmark as a permanent feature of the business: it measures how badly its buyers need what it sells, and that need sets the price only until someone else can meet it.