Business News

In this week’s edition of Business News: poor sales figures create fears of a deepening recession; dirty tricks allegations in the energy sector; the Yeti’s showroom debut; foreign tax havens lure Czechs; and foreigners desert local hotels.

Czech retail figures spark fears of deepening recession

Photo: Štěpánka Budková

Poor Czech retail sales figures for May have fuelled fears that the country could face a double dip recession. Sales fell by 7.5 percent in May compared with the same month in 2008. Worst hit were car sales - which were down by 15.0 percent – but the slide hit all sectors of the economy according to the national statistics office. A double dip recession is often caused when rising unemployment and low demand follows on from the first wave of economic recession hitting manufacturers.

Dirty tricks alleged over massive energy deal

Photo: archive of ČRo 7 - Radio Prague

The Czech Republic’s second biggest mining group, Czech Coal, has accused its rivals of spreading slurs, lies and half truths about it during a recent massive takeover battle. Czech Coal said anonymous letters were circulated during the recent battle for the Czech assets of British company, International Power. The letters suggested that criminal proceedings could be opened into the privatisation of Czech Coal, that a major shareholder in the company used blackmail and threatened managers’ wives of one target company, and that the company faces a 22 billion crown compensation claim.

The takeover battle was won by Czech-Slovak financial group J&T allied with dominant Czech electricity company ČEZ. Czech Coal has appealed to competition watchdogs in Brussels about the sale, one of the biggest Czech deals in the last decade.

Škoda Auto launches Yeti sales

The country’s biggest exporter, carmaker Škoda Auto, has launched sales at home and in Germany of its new small sports utility vehicle – the Yeti. Škoda is pinning high hopes on its first venture into this new segment of the market with around 20,000 Yetis to be produced a year. The cheapest model costs 360,000 crowns or around 19,500 dollars.

Foreign tax havens keep their appeal for Czech firms

Czech companies are increasingly making use of foreign tax havens to evade the local taxman. Figures from the financial information agency Čekia showed that 9,144 companies were making use of such havens by the middle of the year. That is a rise of just over 150 compared with the start of 2009. However, the trend appears to be slowing sharply. In 2008, 740 Czech companies set up in tax havens abroad for the first time.

Czech hotels say goodbye to foreign guests

Photo: www.czechtourism.cz

Czech guests are the one - and perhaps the only - bright spot in the latest figures about the impact of the economic crisis on tourism. The number of Czechs staying in local hotels was stable in the first five months of the year. This compares with an 11 percent fall in foreign guests. Czechs also stayed more nights than previously while foreigners cut their stays, according to the findings of the Czech Statistical Office and Mag Consulting. Mag Consulting expects Czech hotel stays to be down between 8.0 and 11.0 percent for the whole year.