Most Czech industrial firms to post profits for 2020

Most industrial firms in Czechia closed in the black in 2020, with the automotive sector taking the worst hit during the coronavirus crisis, and profits of 63 percent of automotive firms will be lower than projected, a survey by the Confederation of Industry shows.

Forty-five percent of industrial firms will post profits that will be higher than or the same as planned, and the profits of 37 percent will be lower. Some 12 percent of businesses will break even or report losses. Most loss-making firms are in the glass-making and engineering segments. Profit drops were recorded particularly by large enterprises, with the small and medium-sized segment containing more loss-making businesses, confederation head Jaroslav Hanak said.

Roughly 33 percent of industrial firms project annual growth in profits for 2021, over 25 percent expect annual drops, and 10 percent predict losses, he said. Most of the firms projecting profit growth are active in the automotive industry, while chemical and glass-making firms expect declines, he added. As many as 50 percent of engineering firms have seen a rise in the number of contracts for Q1, while roughly 67 percent of chemical firms have reported drops. Contract numbers of glass-making businesses are mostly unchanged.

Some 37 percent of businesses are planning to invest more this year than in 2020. Almost 25 percent want to make bigger investments than in 2019, which mainly applies to chemical and engineering businesses. Firms are not as pessimistic about investments as last year. Almost 50 percent said in June 2020 they were planning to cut their investments. Many firms have realised since then that investments may make them more resilient to crises, Hanak said.

Some 43 percent of businesses have experience with business partners being unable to deliver on their contracts or filing for insolvency. More than 60 percent of firms will not cut jobs this year while 8 percent are planning to reduce their staff numbers, usually by no more than 5 percent. Job cuts are being considered mainly by glass-making businesses.

Almost 33 percent want to hire new staff. This is mainly true of large and medium-sized enterprises, particularly those active in the automotive industry, according to Hanak. Over 90 percent of businesses have under 10 percent of employees in quarantine or isolation due to Covid-19. The survey was conducted among 162 industrial firms in January.

Source: ČTK