Business News

In Business News this week, car producers rev up at the Geneva auto show; a major arms contract is finally sealed; the government’s anti-crisis programme drives on; the mobile phone market slows; but the only way is up for power giant ČEZ.

Car makers put on upbeat show at Geneva auto show

Škoda Yeti, photo: CTK

Two Czech car makers were active at the Geneva Auto Show. Škoda Auto unveiled its new sports utility vehicle, the Yeti, amid a flurry of models in snow boots and skimpy furry costumes. Škoda has brought forvard production of the Yeti in the hope it will help it ride out the recession. With less of a flourish, South Korean car producers Hyundai and Kia announced the Nošovice plant in eastern Moravia will produce a new model - the multipurpose Kia YN. Sales of the Yeti and production of the YN should start in the summer.

Government signs stalled armoured vehicle deal with Steyr

Photo: CTK

The biggest vehicle deal of the week was the Czech government agreement to purchase 107 Pandur armoured vehicles for the army from Austrian producer Steyr. The vehicles will cost 14.4 billion crowns, or more than 640 million US dollars. The final deal ends a six year saga during which the contract was once cancelled and then revived to give the Austrian company a second chance.

Anti-crisis programme advances with VAT and insolvency measures

Two planks of the government’s anti-crisis package made progress this week. After an angry debate, a proposal allowing businesses to write off 19 percent Value Added Tax for all new company cars was approved in the lower house of Parliament. Later, the cabinet backed an amendment to the country’s insolvency law which should help employees of firms which go bankrupt. The law offers to pay up to three months wages to workers when businesses go bust. It also earmarks money for firms on the brink of bankruptcy which could be used as a lifeline to stave off closure.

Standard & Poors makes positive noises about the Czech economy

These moves came against a backdrop of good and bad news for the economy. The good news came from rating agency Standard & Poor's which said that the country should conserve its ‘A’ credit rating thanks to its low foreign debt and the prospect that a lower crown will boost companies competitiveness. On the other hand, investment broker J.P. Morgan Securities warned that the parent banks of Česká Spořitelna and ČSOB, Austria’s Erste Bank and Belgian KBC, look exposed because of their poor loans in the region. And Bank of America predicted the Czech economy will shrink by 1.7 percent this year.

Mobile phone market shows slower growth

The total of mobile telephone numbers in circulation also points to a slowdown. New mobile numbers rose by half a milion in 2008 to a total of just over 13.5 million. That is 200,000 fewer new numbers registered than in 2007.

ČEZ sets new record profit figure

For Czech electricity powerhouse ČEZ there was only news of higher profits and more to come. The state-owned giant announced a record net profit of 47.4 billion crowns in 2008, an increase of 11 percent on the previous year. The company predicts this year’s profits will rise even higher, to 50.2 billion crowns. This is largely thanks to the fact that it sold a lot of this year’s power production at high prices before the crisis hit. But the company many Czechs blame for soaring electricity bills also saw its profits slide in the last quarter of the year. And ČEZ now says Russia and Ukrainian assets will be removed from its list of acquisition targets because of the financial crisis.