Business News

Photo: Kristýna Maková

In this week’s Business News: Tesco rings up Czech losses; massive nuclear contract for Czech engineering firm; national bank governor says no bonus from euro entry; PPP projects under consideration again at transport ministry; and tram maker angered by price and cost ‘slur’

Tesco takes big hit on 2014 performance

Photo: Kristýna Maková
British-based supermarket chain Tesco rang up losses of almost 4 billion crowns last year. That’s almost a fourfold increase compared with 2013. The company says that the heavy loss was largely caused by exception write-offs of land and other property but that the retailer is still making an operating profit. Speculation has surfaced this week that Tesco could sell its Czech operations, either on their own or together with the businesses in Slovakia and Hungary.

Škoda JS lands Paks modernization contract

Paks nuclear power plant, photo: Barna Rovács, Wikimedia CC BY-SA 4.0
Czech engineering company Škoda JS has sealed a massive contract to install new safety and operating systems for Hungary’s Paks nuclear reactor. The total value of the contract comes to around 1 billion crowns, that amounts to around a quarter of the total orders racked up in 2014. Škoda JS competed for the contract against French nuclear giant Areva and Ukrainian contractor Impulz. In spite of the healthy order book, Škoda JS expects only a modest operational profit of around 100 million crowns for 2014.

CNB governor repeats euro adhesion scepticism

Photo: Filip Jandourek, Czech Radio
The governor of the Czech National Bank said this week that Czech entry into the Eurozone would not bring any appreciable boost to the local economy. Miroslav Singer added that it had not been proved that membership of the single currency area means higher growth. He said most analyses showed Eurozone countries did better than outsiders during the early years of the currency union but outsiders have been doing better in recent years. Singer’s Eurosceptic views are at odds with those of Czech President Miloš Zeman, who repeated this week that he is looking to replace the governor and correct the central bank’s mistakes within the next two years.

PPP projects seek to find favour at transport ministry

Dan Ťok, photo: Archive of the Ministry of Transport
The Ministry of Transport is again looking at the possibilities of using so-called Private Public Partnerships (PPPs) to fund some of the country’s stalled highway and motorway construction projects. Minister Dan Ťok declared this week that two sections of highway construction are being examined to determine whether they might be suitable as pilot PPP projects. PPP projects, where, for example, a private company builds infrastructure and is then paid a fee for its use, are a controversial means of cushioning the bill for expensive projects.

Tram maker angered by ‘most expensive’ label

Tram, or streetcar, manufacturer Škoda Transportation is reported to have launched legal action after a former top member of Prague council who dubbed their trams ‘the most expensive in the world.’ Former leading local politician Jan Vašíček highlighted not only the 19.2 billion crown bill that Prague must pay for delivery of 250 trams, he also pointed out their high maintenance costs. Vašíček says these will amount to around 31 billion crowns over 20 years, or around five times the costs incurred for rival types of trams. Some of the higher costs are said to be caused by the excessive wear and tear on the tram lines.