In this week’s Business News: Brussels probes Czech Airlines loan, ČEZ sets record profit but warns over outlook, car maker Hyundai gears up for expansion, Prague struggles to make mark on real estate market, and fresh milk sales come to the capital.
A loan of around 2.5 billion Czech crowns, or around 130 million US dollars to Czech Airlines is being probed by the European Commission because of suspicions it could involve illegal aid. The loan to the carrier was made by state company Osinek in April last year when Czech Airlines faced a cash crisis. The loan was initially secured against some of the airline’s assets but these were later freed up, meaning that no strings were attached to it. The Commission can demand the loan be repaid and impose a fine if illegal aid is found.
Meanwhile, state-owned power giant ČEZ has announced a record profit of 51.9 billion crowns for 2009. That is a jump of 10 percent on the previous year. ČEZ says it was largely able to ride out last year’s slump in electricity sales and prices because it sold much of its production before, when markets were still riding high. Czech demand for electricity dropped by 5.6 percent in 2009. This year, ČEZ predicts profits will fall back to 46.7 billion crowns, although demand for power is forecast to rise.
South Korean car maker Hyundai’s Czech car plant at Nošovice has taken a first step towards further expansion. The plant has been given environmental clearance to build extra capacity allowing gear box production to double from 300,000 to 600,000 a year. That increase is crucial for allowing overall car production at the plant to rise from the current 200,000 to 300,000 by 2011. Some of the extra gear boxes will be shipped to a sister factory across the border in Slovakia.
Prague is the 13th most sought after location in Europe to buy real estate according to a survey of developers and investors released this week by PriceWaterhouseCoopers and the Urban Land Institute. Regionally, the Czech capital trails Warsaw, which was placed eighth. A local representative of PriceWaterhouseCoopers said Prague appeared to have weathered the severe real estate downturn last year and buying interest from international investors is starting to pick up thanks to the city’s profile as a relatively stable and risk free location.
The first automated machine offering milk straight from the dairy to the consumer made its debut in the Czech capital this week. The vending machines allowing dairy farmers to sell direct to the public have spread to 60 sites across the country since their Czech launch last autumn. The machines allow farmers to get significantly better prices than if they sell to large processors or to supermarkets even though every machine costs around 200,000 crowns. But not everybody is welcoming the spread of the milk automats. Chief hygienist Michael Vít warned that the untreated milk should be boiled first. And he highlighted a surge in upset stomachs where fresh milk sales are the strongest because health warnings have been ignored.
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