In Business News this week: speculation soars over Staropramen bid; emissions handout sparks controversy; Czech financial sector gets positive health check; and Aero Vodochody profits take off.
Speculation soars over Staropramen bids
The bidding battle for the Czech Republic’s second biggest brewery Staropramen appears to be coming to a head according to financial news agency reports this week. The world’s biggest brewer InBev reportedly wants to offload much of its East European assets – including the Prague brewer – in an attempt to cut its debt. At least three private equity companies are reported to be circling InBev’s eastern beer portfolio. Some reports suggest Staropramen is attractive enough on its own to be sold separately. Czech newspapers have suggested recently that Dutch multinational Heineken might be in the front line to boost its local market share by adding Staropramen to its regional beer empire.
Emissions break for power companies attacked for favouring ČEZ
Photo: European Commission
Czech mps have voted for a controversial proposal which would free electricity companies from having to buy greenhouse gas emission permits, if they invest the saved cash in clean power production. The proposal takes advantage of an already agreed concession by the European Union, offered to poorer countries that still rely on highly polluting coal for much of their power supply. But the Czech lower house move to put that derogation into effect has been denounced domestically as a multi-billion windfall for the country’s biggest power company ČEZ. Other power companies complain ČEZ is best placed to profit from the proposal, because it has many projects in the pipeline while they will be hard pressed to take advantage of the emissions investment break.
Financial sector comes out shining following “stress” tests
Photo: Štěpánka Budková
The Czech financial sector is not threatened by collapse even if the current economic crisis gets much worse according to a Czech National Bank report this week. The bank carried out so-called stress tests on the country’s banks, insurance companies and pension funds. Even in worse than expected economic scenarios of market nervousness and economic depression, it found that the maximum bailout for the financial sector would be 23 billion crowns, or 0.6 percent of Gross Domestic Product. The central bank does however warn of the danger of a second wave recession if banks cut off credit because of ballooning bad debts. But authors of the report admit this risk is difficult to determine.
Aero Vodochody profits soar despite high crown
Aero Vodochody
And to end on a bright note, the Czech Republic’s biggest aeronautics company – Aero Vodochody – has turned a profit for the second year in a row, in spite of suffering from the high level of the Czech crown. The company announced a profit of just over 400 million crowns for 2008 on turnover of 4.2 billion crowns. It is the company’s best result during the past six years. Most of Aero’s profits stem from a contract to co-produce Sikorsky helicopters with 50 produced last year. It also works on civil and military contracts for a series of global aircraft producers. Aero was bought by private equity group Penta in 2007.
