Business News

In Business News this week: the IMF spreads gloom; ČSA bidders downed; Lukoil looks to expand; three make it into last round of massive clean up tender; and McDonald’s looks to coffee heaven.

IMF issues stark growth forecast

The International Monetary Fund has issued a startlingly gloomy prediction for Czech economic growth this year. The prestigious institution says the economy will shrink by 3.5 percent and barely get back into growth next year. The Czech government and national bank recently said that the worst case scenario this year is for the economy to shrink by 2.0 percent. Most local analysts have described the IMF prediction as too pessimistic but they warn that unemployment could rocket to over 10 percent this year.

Two on board for ČSA bidding

The government has narrowed down the bidders vying for state-owned airline ČSA by weeding out bids from Russian carrier Aeroflot and Czech financial group Odien. That leaves KLM-Air France and the partnership of Czech holding company Unimex and the biggest Czech private air carrier, Travel Service, still in contention. ČSA is expected to be privatized by October with an anticipated price tag of around 4.5 billion crowns or 215 million dollars.

Lukoil refines Czech strategy

Photo: CTK

While Aeroflot’s half-hearted bid has fallen by the wayside, the country’s biggest privately held oil company is clearly eyeing up expansion in the Czech Republic. The president of Lukoil, Vagit Alekperov, confirmed that it would like to get a stake in the Czech Republic’s biggest oil refinery company, Česká Rafinérská, in an interview with Czech Television this week. But Alekperov said that he is not interested in doing an asset swap deal with Rafinérská’s majority shareholder, Poland’s PKN Orlen. Lukoil already owns a chain of Czech petrol stations and the Lukoil boss says it wants to be involved in all stages from oil extraction to petrol pump sales.

Narrowing the clean-up tender contenders

The Ministry of Finance has whittled down the bidders for what has been dubbed the contract of the century. This is a 115 billion crown tender to clean up some of the Czech Republic’s worst ecological damage dating from before 1992. Half of the original six contenders have now been excluded from the tender. This leaves Czech companies Geosan Group and Environmental Services and the local unit of Danish company Marius Pedersen Engineering still in the running. These will now be invited to put a price tag on their clean up offers.

McDonald's gets a taste for coffee

Photo: archive of Radio Prague

And finally, McDonald's appears to be lovin’ it in the Czech Republic. The fast food giant’s Czech sales last year shot up nearly 18 percent to around 3.7 billion crowns. McDonald's expects growth again this year and will open a handful of new restaurants even though it is already feeling the effect of fewer hungry tourists descending on the country. It also plans to test out coffee bars in new and reconstructed restaurants with the liquid offered in porcelain instead of plastic cups. McDonald’s claims to be the biggest fast food chain in the country with 35 percent of the market.