Business News
In Business News this week, the Finance Ministry cuts growth hopes; good news for new homebuyers; Orco takes a plunge; the inside dealer still on the outside; Moravia Energo’s multi-billion bill; and the Fabia scores big time in Germany.
Finance Ministry says economy could contract by 2.0 percent
Finance Minister Miroslav Kalousek has said that his ministry is working on a scenario of Gross Domestic Product Growth of zero to minus two percent this year as a result of the global economic crisis. He added that a two-percent drop would see the state budget deficit ballooning to between 110 and 120 billion crowns. This year’s state budget, passed in December, originally estimated growth of 4.8 percent with a deficit of just 38.1 billion crowns.
Survey says flat prices should fall by up to a third
A joint survey by Deloitte and Hyposervis has brought good news for those seeking to get a foot on the Czech property ladder or upgrade their abode. It says prices of older flats should tumble by up to 20 percent this year with falls of between 20 and 30 percent for prefabricated flats, paneláks, and between five and 15 percent for new flats. In spite of this, the survey expects demand for new housing to drop by 45 percent this year compared with 2008.
Real estate developer Orco sparks a slump in its shares
Meanwhile, one the biggest real estate developers on the Czech market, Orco Property Group, sparked a plunge in its share price this week when it postponed the release of its 2008 results. Trading in the shares were suspended immediately following the announcement but they shed nearly a fifth of their value when trading resumed the next day. Orco, one of the leading office, hotel and flat developers in the Czech Republic, expects to outline its strategy on March 25 and give its results by the end of the month.
ČEZ boss found guilty of insider trading
The first Czech case of insider trading has been dealt with by a local court. A Prague court found the head of trading at electricity giant ČEZ, Alan Svoboda, guilty of insider trading. He bought company shares ahead of a results announcement and sold them for a 1.6 million crown profit. But while the presiding judge said insider trading took place, he added that the company results were not unexpected and shares were on an upward trend anyway. The court has forwarded the case to the Czech National Bank which can impose a fine of up to 4.0 million crowns.
Debt bill of crashed energy trader estimated at up to 4.0 billion crowns
Crashed Czech energy trading company, Moravia Energo, racked up debts of 3.5 billion crowns and the final bill could reach up to 4.0 billion, according to Friday’s Hospodářské Noviny. This would make it one of the biggest Czech corporate crashes in recent history. The paper points outs that some of the country’s biggest banks and energy companies could have trouble recovering hundreds of millions in loans. The energy trader, now facing bankruptcy, got into trouble after purchasing large amounts of electricity at the peak prices last summer before the bottom fell out of the market.
German scrap law fuels Fabia sales
On a brighter note, Škoda Auto is enjoying a sales boom in Germany thanks to the country‘s incentives to scrap old cars and buy new. The Czech manufacturer’s downmarket Fabia shot to second place on the German market in February with 9,190 units sold. It was only topped by the Volkswagen Golf. The German scrap incentive of 2,500 euros per car was introduced at the start of the year and has helped new cars sales more than double between January and February.
