The record-breaking financial results of the Pardubice-based company Explosia are not merely the success of a single state-owned enterprise. They reflect a fundamental shift in the European security landscape, in which the production of ammunition, propellants, and explosives is once again becoming a matter of national security. Amid the ongoing war in Ukraine, the extensive rearmament of European armies, and growing demand for ammunition, Explosia is gaining significance that extends far beyond the borders of the Czech Republic. At the same time, the question arises as to whether the state should consider selling a company whose products are among the key components of the European defense industry.

Pardubice-based Explosia achieved its best-ever financial results in 2025. Revenue from the sale of products and services rose 64 percent year-over-year to 2.996 billion crowns. Net income nearly doubled from 442 million crowns to 838 million crowns, and operating profit exceeded one billion crowns. Approximately two-thirds of production was destined for export, and the number of employees rose to 698.

However, the numbers alone do not explain the essence of the company’s current success. Explosia is benefiting from the transformation of the European security landscape that began after Russia’s invasion of Ukraine in 2022. The war demonstrated that Europe had long underestimated not only the size of its ammunition stockpiles but, above all, the production capacity needed to sustain a prolonged, high-intensity conflict.

While public debate focuses primarily on tanks, fighter jets, or air defense systems, the true foundation of defense capability lies in the industry’s ability to produce ammunition in large volumes over the long term. It is precisely here that Explosia has established itself as a strategically important company of European significance.

Its role is all the more important given that the Czech Republic is now not only a purchaser of defense equipment but also a major manufacturer. In recent years, the Czech defense industry has become one of the fastest-growing sectors of the domestic economy and is playing an increasingly significant role in European efforts to strengthen defense capabilities.

Explosia’s significance does not lie in the production of finished weapon systems. Its products are the fundamental building blocks without which modern ammunition cannot be manufactured. The company is among Europe’s leading manufacturers of smokeless powders, nitrocellulose and nitroglycerin propellants, plastic explosives, and propellant charges for large-caliber ammunition.

It is precisely the production of these components that has emerged as one of the main bottlenecks in the European defense industry since 2022. Both the European Commission and NATO have repeatedly pointed out that the problem is not only the final production of artillery shells, but above all the insufficient capacity to produce propellants, nitrocellulose, and other chemical components needed for their manufacture.

This is also confirmed by Explosie’s own results. Revenue from nitrocellulose powders rose by 169 percent year-over-year, revenue from nitroglycerin powders by 41 percent, and revenue from plastic explosives by as much as 438 percent. At the same time, the company acknowledges that demand continues to exceed its production capacity.

Furthermore, Explosia’s significance must be viewed within the broader context of the Czech defense industry. The company’s products enter the supply chains of ammunition manufacturers in the Czech Republic and abroad. Without sufficient production of propellants and propellant charges, it is not possible to increase ammunition production in the long term – production that is currently one of the key elements in supporting Ukraine and replenishing the stockpiles of NATO member states.

This is where the connection to other Czech companies comes into play. Through its subsidiaries, the CSG Group is significantly increasing the production of ammunition and military equipment. STV Group is expanding its capacity in the field of artillery ammunition. Colt CZ is strengthening its position among manufacturers of small arms and military equipment. RETIA, ERA, and Tatra Defence Vehicle are contributing to the modernization of armed forces in the Czech Republic and abroad.

Explosia, meanwhile, represents one of the most important links in this ecosystem. Unlike manufacturers of end-use systems, it stands at the very beginning of the production chain. Without its products, it is impossible to increase ammunition production in the long term or to respond to the growing demand from European armies, whose goal is to boost production in areas that Europe considers critical to its defense capabilities.

This is not exclusively a Czech phenomenon. Similar investment programs are currently being implemented by Rheinmetall in Germany, Nammo in Norway, BAE Systems in the United Kingdom, and KNDS in France and Germany. The European defense industry is undergoing its greatest expansion since the end of the Cold War.

Explosia’s record results come at a time when the government is considering the possibility of selling the company to a private investor. From a purely economic perspective, such a consideration is understandable. The company is posting record profits, its value is rising, and interest from potential investors is high.

From a security perspective, however, the debate becomes significantly more complex. Europe is currently investing hundreds of billions of euros in defense while simultaneously seeking to reduce its dependence on suppliers outside the European Union. Production capacities for ammunition, propellants, and explosives are therefore increasingly being designated as strategic assets. The reason is simple: new production capacities cannot be built in a matter of months. It is a process requiring significant investment, specialized technology, experienced experts, and lengthy approval processes.

Moreover, the war in Ukraine has shown that the industrial base is just as important as the armed forces themselves. The ability to produce ammunition, replenish stocks, and maintain production during a crisis is becoming one of the decisive factors in a nation’s defense capability. The question of Explosie’s future is therefore not merely economic. It is, above all, strategic.

After decades of relative calm, Europe is rediscovering the importance of the defense industry. The war in Ukraine has shown that modern conflict is not merely a clash of armies, but also a contest of production capacities, technological know-how, and the ability to sustainably supply the armed forces over the long term.

Today, Explosia is not merely a successful state-owned enterprise with record-breaking results. It is part of the infrastructure on which the ability of the Czech Republic and its European allies to respond to future security crises depends. Its significance lies not only in economic indicators but, above all, in the fact that it manufactures components without which the functioning of the modern defense industry cannot be ensured.

The real question, therefore, is not how much the state could potentially earn from a sale of Explosia. What matters more is what value this company will have in five or ten years in a Europe that is building new defense capabilities, increasing ammunition production, and preparing for a less secure environment in the long term. It is precisely in such a world that manufacturing capabilities can become one of the state’s most valuable strategic assets.