Business News

In this week’s Business News: Orco restructuring programme cleared; real estate prices retreat to pre-peak levels; steel spat threatens hundreds of jobs; mining giant surprises with first quarter loss; and top banker hits out at market regulation.

Orco cleared to proceed with restructuring

One of the biggest property developers in the country, Orco, had its restructuring programme cleared by a Paris court this week. The programme is based on the settlement of its massive debts, which according to some calculations exceed its assets, over the next 10 years. In practical terms, Orco can now proceed with a sell-off of some of its large property portfolio and get on with projects where it believes it can turn a profit. These include a massive office and housing complex on around 25 hectares in the Prague suburb of Bubny. Analysts said the court decision helped pull the developer back from liquidation.

Real estate prices recede fast from 2008 peak

Photo: archive of Radio Prague

Prices of flats and houses in the Czech Republic have fallen back to levels last seen four or five years ago, says a new study by the Czech Statistical Office. According to a provisional estimate by the office, prices paid at the start of 2009 fell back to 151.7 percent of those in 2005. This compares with the peak of 166.7 percent in 2008. The office reckons that the downward trend throughout 2009 and into 2010 means that prices now are just 10 percent higher than in 2005. The study says that the economic crisis, demographic trends and the artificially low, regulated, prices for rented property have all depressed the market. But it adds that there is a floor beyond which prices cannot drop.

Steelmaker threatens closure over price dispute

A conflict between two of the country’s biggest steel making concerns is threatening hundreds of jobs in the eastern city of Ostrava. Steel producer and processor Evraz Vítkovice Steel says it could temporarily or fully close its steelmaking operations because of a dispute with Arcelor Mittal Ostrava over the prices it pays for pig iron deliveries. Vítkovice says it is paying over the odds for the key raw material and says it will make a decision over closure by mid-June. The Russian-owned company employs almost 1,300 people in steelmaking and production of steel sections and plates in Ostrava.

NWR announces surprise first quarter loss

The company supplying steel plants in the Czech Republic and much of central Europe with coking coal, New World Resources, announced a surprise loss of around 370 million crowns in the first quarter of the year. Analysts had expected a profit to follow on from the good results of the last quarter of 2009 and the overall pick up in demand. The company blamed the surprise losses on a run down of its coal and coke stocks which cut coal production and a heavy hit taken as a result of the surge in the value of the Czech crown. It predicts a return to profit over the next three months.

Singer attacks market regulation moves

Miroslav Singer

One of the top members of the Czech National Bank has hit out at measures aimed at curbing high risk speculative trading and the activity of hedge funds. In a newspaper interview, deputy bank governor Miroslav Singer denounced a temporary German ban on so-called short selling — the sale of shares you don’t own in the hope of making a profit by buying them later at a cheaper price. The move was taken during the week in a bid to calm panicked markets. Mr. Singer said the trades would just shift elsewhere. And he also slammed European moves to step up regulation of hedge funds, adding that these has not caused the financial meltdown that spread into a wider economic crisis. The Czech Republic and Britain lost a battle to defeat the tougher European hedge fund rules earlier in the week.