Business News

In this week’s Business News: Brewers look to price rises in spite of consumption slump; Prima to hike ad charges by 10 percent; Škoda Auto doubles profits on record car sales; banks step up home auctions for mortgage defaulters; and biomass highlighted as next renewable power problem.

Beer rises threaten to worsen consumption slump

Czech brewers are predicting their worst year in two decades. Beer consumption during the first six months of the year fell by 12 percent with per capita beer consumption falling from 160 litres to around 140 litres. The Czech Beer and Malt Association says the year end percentage drop could exceed 12 percent. In spite of weak demand, the country’s second biggest brewer Staropramen this week announced that it will raise the price of draught beer by an average 4.5 percent from November. Market leader Plzeňský Prazdroj is weighing up how fast to follow that move.

Prima ups ad charges in spite of unclear ad outlook

The country’s second biggest commercial television station, Prima, has announced that its ad charges will climb by 10 percent from the start of next year. The broadcaster says the increase is based on an upturn in demand after the sector was one of the worst hit by the economic downturn when heavy discounts were offered to advertisers. But the commercial TV outlook is far from clear, with some predicting the downturn is set to continue into next year. Nine month revenues for the biggest commercial station, Nova, announced this week show that they are still trailing those for 2009.

Škoda Auto posts record sales to September, doubles profits

But there is no doubt about recovery at the country’s biggest car maker Škoda Auto. Net profits more than doubled in the first nine months of the year to over 6.0 billion crowns, around 336 million US dollars, compared with the same period in 2009. Total turnover was up just over 16 percent at 160 billion crowns with a nine month record of almost 569,000 cars sold. Škoda Auto’s board chairman repeated the target of doubling car production to around 1.5 million cars a year with a 10-strong portfolio of models within a decade.

Forced home auctions double as banks deal with worsening mortgage default problem

Photo: archive of Radio Prague

Banks are turning more and more to forced auctions of homes as a rising number of Czech families find they cannot repay mortgages. The proportion of badly performing home loans rose to just over 3.0 percent at the end of August, around double the total a year earlier. And banks are increasingly turning to forced auctions of properties where there is no chance debtors can repay loans. The number of forced auctions climbed to over 600 in the year to September ― more than double the total for the whole of 2009 ― with banks predicting even more forced sales in 2011.

Biomass starts to eclipse solar as next renewable power problem

Photo: European Commission

Hot from putting the lid on an expensive solar power boom which threatened to increase electricity prices next year by more than 20 percent, the Czech government is now seeking to head off other costly surges in renewable power. Prime Minister Petr Nečas has pinpointed incentives for burning biomass for power generation as the next likely problem area and called for a commission to monitor developments. One problem is that the Ministry of Industry has itself selected biomass as one of the most promising areas for development as it shifts the renewables burden away from solar power.