In this week’s Business News: Czechs shun shops for non-essential buys; lawmakers vote to curb solar power boom; Czech Railways pledges revamp of passenger carriages; banks seek loans guarantee from Tatra; and ČSOB share sale reportedly delayed.
Retailers hit by sharp drop in spending
Czechs are refusing to dip into their pockets for non-essential items in spite of aggressive price cutting by shops. That is the message from January retail sales figures released by the national statistics office. Sales of non-food items, excluding cars, were down 5.0 percent compared with a year earlier. That is the biggest monthly sales drop in the last 10 years. Retailers suffering the most from the savings urge are drug and book stores, with sales down around 10.0 percent, and clothes and shoes outlets, where turnover has dropped by almost 6.0 percent.
Lower house votes to cut solar power payments
Photo: European Commission
A major step was taken this week to curb the Czech Republic’s solar power boom. Deputies in the lower house voted a change to the existing generous subsidy regime allowing the country’s energy regulator to cut payments in line with sharply rising returns for investors. The not so-sunny Czech Republic has some of the highest payments for solar produced electricity in Europe. That has sparked a stampede of panel building and warnings that production surges could cause the national power grid to collapse. The changes are expected to be backed in the upper house and take effect next year. Even so, the Czech Republic is still expected to pay around 15 billion euros over the next 20 years in support for solar power.
Czech Railways to modernise ageing passenger carriages
Czech Railways says it will launch tenders totalling a record 16 billion crowns this year to modernise its ageing passenger carriages and some of its trains. The investment will take place over the next four years with most of the cash aimed at improving carriages. Many carriages are at least 30 years old, giving travellers the impression that they are taking a trip back in time when they get on board. The modernisation will cover domestic local, express and international services.
Tatra owners pressed for loans guarantee from banks
Banks are calling for the owners of iconic Czech vehicle producer Tatra to pledge the whole company as a guarantee for outstanding loans, according to Czech media reports. A board meeting to decide on that step should take place at the end of the month. Tatra, famous for its revolutionary aerodynamic cars and trains, now just makes trucks. But the economic crisis has hit its sales hard and the company owes around 1.0 billion crowns to the banks. So far the company has not produced results for 2009 but at the end of 2008 accountants were already warning of cash flow problems.
ČSOB share issue hit problems
Photo: Štěpánka Budková
The biggest single placement of Czech shares this year has run into problems, according to reports from Belgium. Belgian banking group KBC wants to sell between 30 and 40 percent of ČSOB, which according to some criteria is the biggest Czech bank. Flemish paper De Standaard has reported the share sale was originally planned for April or May but will not now take place until June at the earliest, because of volatile market conditions and the complications of putting the transaction together. KBC has put no firm date on the placement, only saying it should take place this year.
