In this week’s Business News: deflation takes to the Czech stage, Belgian banking group seen boosting Prague exchange, multiplex operator gets bigger screen role, ČEZ turns up the heat, and more Scrooge at Czech Christmas
Deflation makes brief Czech appearance
The demon of deflation made an appearance on the Czech economic scene this week. Consumer prices in October were reported down 0.2 of a percentage point compared with September and compared with the same month a year earlier. But the Czech National Bank has dismissed worries that the fearful phenomenon of consumers holding off purchases because prices continue to fall could take hold. Its latest inflation report sees zero growth in prices for the end of this year and start of 2010. And it says inflation could even climb above its 2.0 percent target by the end of the 2010. The bank also expects mild growth of 1.4 percent next year and just above 2.0 percent in 2011.
ČSOB shares seen launching on Prague exchange
Photo: Štěpánka Budková
The Czech capital market has had the profile of a sad suitor with few new companies launching their shares there in recent years. But there is good news apparently in store for the Prague exchange from the bad news that has hit Belgian banking group KBC. The Belgian group is the biggest shareholder in the Czech bank ČSOB and according to reports in the Flemish press is ready to launch around 50 billion crowns worth of ČSOB shares on the local market. That is the equivalent of about 40 percent of ČSOB. The Belgian banking group is being pressured by EU competition watchdogs to sell off some of its prize assets as the price for state support given during the financial crisis.
ČEZ stakes out local heat market
Czech power giant ČEZ has bought a bigger stake in the local heat market. The state-controlled colossus announced a deal with the French parent company of Dalkia Czech Republic to take a 15 percent stake in the biggest Czech heat and power company and take control of one its local businesses based in the northern city of Ustí nad Labem. The deals are worth around 9.0 billion crowns. ČEZ sees the deal as the price for future strategic cooperation with Dalkia. But it has also admitted that it wants to unseat Dalkia as the number one local heat company because this is about the only local market where it can grow.
CineStar bags bigger role in multiplex cinema market
The picture of the booming Czech multiplex cinema market has become clearer over the last few days. The country’s biggest operator CineStar has bought out one of its biggest rivals Village Cinemas Czech Republic. One of the main results for CineStar will be a foothold in Prague for the first time with the acquisition of two multiplex complexes in the capital. The deal takes CineStar’s total number of screens to 83 and seats to nearly 14,700. Company revenues rose by around a quarter in 2008 but profits were flat.
More modest Christmas on the cards
And finally, a more modest Christmas is on the cards for Czech households. They will on average spend around 13,400 crowns — around 500 euros — on the annual bonanza according to the annual survey by consulting company Deloitte. That is a 2.5 percent drop compared to the previous year. The survey sees the biggest cut falling on festive cultural spending with a whopping 8.4 percent drop. Spending on gifts for the loved and not so loved is set to decline by 2.3 percent but there will be hardly any belt tightening on the food and drink budget.
