Share of firms expecting annual profit hikes in 2021 up

The percentage of Czech firms expecting annual hikes in profits this year rose to 45 percent in May from January's 33 percent, which is thanks to rising contract numbers, according to a survey carried out among 155 industrial businesses by the Czech Confederation of Industry in May.

The improvement in businesses' confidence is spilling over into the performance of the entire economy. The confederation has upgraded its economic growth estimate to 3.0-3.5 percent for this year. The figure may rise to almost 4 percent next year, with the economy's performance to surpass the 2019 pre-pandemic level and be driven by corporate investments, among others, the confederation said.

The May survey shows firms will mostly invest in new production technologies, modernisation or extension of production premises, and research and development, confederation vice-president Radek Spicar said. As many as 65 percent of respondents expect their contract numbers to increase annually in H2, with almost half of them envisaging more than 10 percent growth.

Firms' positive expectations for H2 are all the more valuable because they are being compared to H2 2020, when industry was successfully making up for the spring losses, the confederation's Bohuslav Cizek said. Some 57 percent of firms expect their contract volumes to be bigger than in 2019, aided by the lifting of restrictions, recovery of foreign economies, and return of customers, he added.

Almost two-thirds of respondents said they are ready should another coronavirus wave occur in the autumn, and 20 percent are working on a strategy to mitigate the impact of another wave, according to Spicar. As many as 91 percent of firms saw input prices rise in the past six months, with mainly steel, copper, aluminium and other metals, plastic, electronic chips, energy, and building materials becoming more expensive. Almost 50 percent of respondents said they have had to raise product prices as a result.

Czech industrial output rose by 55.1 percent yr/yr in April, the Czech Statistical Office (CSU) said. The number of new contracts soared by 90 percent in annual comparison.

Source: ČTK

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