Czech trends in producer price indices for Q4 and the Year 2024

In the fourth quarter of 2024, producer prices across multiple sectors in the Czech Republic experienced notable trends compared to the previous quarter and the same period in 2023. Agricultural producer prices rose by 6.8% quarter-on-quarter (q-o-q) and by 5.0% year-on-year (y-o-y). Key contributors to the increase included higher prices for eggs (+26.5%), milk (+8.1%), and oilseeds (+7.5%), while declines were seen in fruit (-4.6%) and slaughter pigs (-3.9%). Over the entire year, agricultural producer prices dropped by 5.9%, with significant declines in crop production (-9.1%) and animal production (-1.5%).

Industrial producer prices increased slightly by 0.3% q-o-q in Q4 2024, driven by higher prices in electricity, gas, steam, and air conditioning (+1.9%), and paper and electronic products (+1.5%). However, prices for crude petroleum and natural gas fell significantly (-3.3%). On a y-o-y basis, industrial producer prices rose by 1.8% in Q4, with notable increases in water treatment services (+9.2%) and electricity (+6.7%). Across 2024, the annual rise in industrial producer prices averaged 0.8%, marking a decline from the 5.0% increase seen in 2023.

Construction work prices grew by 0.7% q-o-q in Q4 2024 and by 2.4% y-o-y, reflecting moderate activity in the sector. For the full year, construction prices increased by 2.1%, a deceleration from the 5.9% growth in 2023. Input prices for construction materials dropped by 0.5%, reversing the upward trend of the previous year.

Service producer prices in the business sector rose by 1.5% q-o-q in Q4 2024 and by 3.7% y-o-y. Significant contributors to the increase included advertising and market research services (+18.3%) and programming and broadcasting services (+19.6%). Excluding advertising services, prices rose by 0.3% q-o-q and 3.1% y-o-y. For the entire year, service producer prices grew by 3.8%, with advertising, employment, and real estate services among the largest contributors.

These trends highlight a varied landscape, with inflationary pressures easing in some areas, such as industrial production and construction inputs, while services and specific agricultural products continued to see price increases. The detailed data underline the ongoing adjustments across sectors in response to market dynamics and broader economic conditions.

Source: Czech Statistical Office

Bank Pekao allocates PLN 370 million for CHF loan risks in Q4 2024 results

Bank Pekao has announced the allocation of PLN 370 million as a provision for legal risks related to foreign currency mortgage loans in Swiss francs (CHF) in its consolidated financial results for the fourth quarter of 2024. This provision reflects the anticipated impact on both gross and net financial outcomes, stemming primarily from a forecasted increase in borrower lawsuits.

Additionally, the bank included a deferred income tax asset of PLN 103 million, linked to expected cancellations associated with CHF-denominated mortgage loans.

Bank Pekao also introduced a change in how accrued interest is presented in its consolidated financial statements. Previously, the group recognized gross contractual interest on the balance sheet, factoring accrued interest into expected credit loss calculations. Under the new approach, accrued interest will be adjusted for the initial assessment of credit risk at the time of the loan’s origination. This change reduces the non-performing loan (NPL) portfolio by approximately PLN 0.8 billion, without affecting the group’s consolidated capital or financial results.

The bank’s consolidated financial report for 2024 is scheduled for release on 27 February 2025.

Bank Pekao, a key member of the PZU Group, is among the largest financial institutions in Central and Eastern Europe. Listed on the Warsaw Stock Exchange since 1998, the bank reported total assets of PLN 305.27 billion at the end of 2023.

Source: Bank Pekao and ISBnews

InPost to boost UK investment to GBP 1 billion by 2029

InPost Group plans to invest an additional GBP 600 million in the UK by the end of 2029, bringing its total investment in the country to GBP 1 billion, the company announced. The expansion includes installing 5,000 new parcel lockers in 2025 and enhancing logistics infrastructure, which will create 12,000 new jobs.

In 2024, InPost doubled its package deliveries in the UK, reaching 93.2 million parcels, highlighting the growing demand for its services. The company’s UK network, currently operating at more than 100% capacity, demonstrates significant potential for expansion. By the end of 2024, InPost had over 13,000 out-of-home (OOH) points in the UK, with its automated parcel machine (APM) network expanding by nearly 3,000 devices, totaling 9,200 units.

“Our investments will revolutionize e-commerce for both buyers and sellers in the UK. This is already our fastest-growing market, and we are meeting the increasing expectations of consumers by creating state-of-the-art and user-friendly delivery solutions,” said Rafał Brzoska, founder and CEO of InPost. “In 2025 alone, we will increase the number of parcel lockers by 50%.”

As of 2024, InPost’s total UK investment reached GBP 426 million. Last year, the company solidified its market position by acquiring the remaining 70% stake in Menzies Distribution Limited, enabling full control of its logistics processes and investment plans. InPost currently employs 2,519 people in the UK, with plans for significant workforce expansion in the coming years.

Founded in 1999 by Rafał Brzoska in Poland, InPost provides e-commerce delivery solutions, including a network of parcel lockers in Poland, the UK, and Italy. It also offers courier and fulfillment services for e-commerce sellers in Poland. The company acquired the French logistics firm Mondial Relay in July 2021 and debuted on Euronext Amsterdam in January 2021.

Source: InPost and ISBnews

Nowy Styl eyes further acquisitions, including opportunities in Scandinavia

Nowy Styl is exploring opportunities for further development in Western Europe, particularly in Scandinavian markets, as part of its growth strategy through acquisitions. The company is also open to potential acquisitions in Poland, focusing more on enriching its product portfolio than expanding production capacity, according to President Adam Krzanowski.

“We are continuously monitoring potential opportunities to acquire companies abroad, particularly in markets where our presence is not yet strong,” said Krzanowski.

He noted that Scandinavia is a key area of interest due to its distinctive and localized market characteristics, which make it challenging for non-Scandinavian companies to penetrate. “The product requirements there are very specific, and local certifications play a significant role,” he explained.

Potential acquisitions may not be limited to furniture manufacturers. Krzanowski mentioned the possibility of acquiring a distributor or a local brand with strong market appeal. In Poland, the company is also open to acquiring firms with innovative products.

Nowy Styl’s strongest markets include Germany, Switzerland, France, and Poland, with Poland accounting for approximately 15% of the company’s sales. The company sees further opportunities for organic growth in these regions.

For now, Krzanowski stated that the group’s production capacity is well secured through its existing facilities, including two major plants focused on manufacturing chairs, armchairs, and office furniture. Instead of expanding production, the company aims to strengthen its partnerships and explore technological collaborations over the next few years.

“I would prefer not to invest heavily in production capacity but rather focus on finding the right partners,” he added, emphasizing the importance of investing in showrooms to enhance customer engagement.

Currently, Nowy Styl operates 28 showrooms worldwide, including prominent locations in London, Paris, Berlin, Prague, and Dubai. The company has already completed three acquisitions in Germany, securing businesses with a combined turnover of €30 million.

As a comprehensive provider of furniture solutions for office spaces and public places, Nowy Styl owns five brands: Nowy Styl, Kusch+Co, SOHOS by Nowy Styl, Sitag by Nowy Styl, and Forum by Nowy Styl. The company collaborates with renowned designers, including Karim Rashid, who created the iconic Bound armchair.

Source: Nowy Styl and ISBnews

Ransomware attacks on Poland surge by 37% in second half of 2024

Ransomware attacks targeting Poland increased by 37% in the second half of 2024 compared to the first half, according to a Threat Report by ESET analysts. This surge elevated Poland’s global ranking as a target for ransomware attacks to 7th place, up from 13th earlier in the year.

The report identified the United States (9.2% of global attacks), Russia (7.8%), and China (7.4%) as the top three countries targeted by ransomware, with Poland accounting for 4% of worldwide attacks in the second half of 2024. This is up from 2.3% in the first half. Analysts noted that Poland’s strategic role as part of NATO’s eastern flank amid regional tensions, particularly concerning Ukraine, makes it a prime target.

ESET analyst Kamil Sadkowski explained the ransomware process, stating, “Cybercriminals scan the internet daily for vulnerable systems. They target those with the highest likelihood of yielding a ransom, infiltrating networks, stealing and encrypting data, and then demanding payment from companies and institutions.” He emphasized that attacks often begin subtly, such as through infected email attachments or fake websites mimicking legitimate ones.

The lack of cybersecurity training among employees exacerbates the problem. Sadkowski noted that 52% of employees have not participated in any cybersecurity training in the past five years, leaving organizations exposed to threats.

Data from the report “Cyberportrait of Polish Business: Digital Security Through the Eyes of Experts and Employees,” cited by ESET, revealed that 88% of companies surveyed experienced a cyberattack or data leak in the past five years. Ransomware accounted for 18% of these threats, ranking just behind phishing (34%) and attacks on Wi-Fi networks (22%).

The lack of awareness among employees about ransomware is particularly concerning. Only 19% of Polish employees are familiar with the term, leaving over 80% potentially unable to recognize or respond to such threats. According to Paweł Jurek, Business Development Director at DAGMA IT Security, this lack of awareness benefits cybercriminals. “Ransomware attacks are a win-win for criminals. If the victim pays the ransom to resolve the issue quickly and avoid reputational damage, the criminals profit. If the organization refuses to pay, the stolen data is often sold on the darknet, ensuring another source of profit.”

The rising frequency and impact of ransomware attacks highlight the urgent need for increased cybersecurity measures and training to protect organizations and individuals in Poland.

Source: ESET and ISBnews

CTP expands presence in Serbia with land acquisition in Kragujevac

CTP has solidified its position in Serbia with the acquisition of a substantial parcel of land in Kragujevac, paving the way for the development of 50,000 sqm of new lettable industrial space.

This acquisition aligns with CTP’s strategic plan to expand its footprint in emerging industrial hubs and attract investors to Serbia’s growing market. The site, located within the region’s Free Trade Zone, an established automotive industrial area, will complement CTP’s existing facilities in Kragujevac, reinforcing the company’s growth trajectory in Serbia.

CTP is already a significant player in the Serbian market, known for delivering Grade A industrial facilities, including 90,000 sqm of production space for Yanfeng, a Chinese automotive supplier. The company’s Serbian portfolio currently spans 600,000 sqm, with an additional 200,000 sqm planned for completion in 2025.

Kragujevac, Serbia’s fourth-largest city, boasts a strong heritage in automotive and defense industries. Its strategic advantages include a skilled and affordable labor force, a central location in the Balkans, and proximity to major OEMs and suppliers, making it an attractive destination for industrial investment.

Petar Kolognat, Business Development Director at CTP Serbia, highlighted the city’s appeal: “CTP’s commitment to Kragujevac underscores the city’s growing reputation as a prime destination for industrial and logistics investments. This expansion will strengthen the local economy, create new job opportunities, and enhance connectivity to key markets. It will also provide businesses with modern facilities and strategic advantages in Southeast Europe.”

The new development is set to further position Kragujevac as a key industrial hub, reinforcing CTP’s role as a leader in Serbia’s dynamic real estate market.

European REITs show signs of recovery amid stabilizing conditions

The European real estate investment trust (REIT) sector has seen a significant shift in 2024, with improving funding conditions and stabilizing valuations across most asset classes. While 20 European real estate companies have been downgraded since 2022, the percentage of rated REITs with negative outlooks or on CreditWatch dropped to 27% in early 2024, compared to 33% the previous year. Bond issuances by rated European REITs rose to €19.3 billion in 2024, a substantial increase from €5.3 billion in 2023, signaling a resurgence in investor confidence.

Rental income is expected to continue growing in 2025, supported by improved consumption levels and rising GDP growth. Inflationary pressures are projected to ease, with Eurozone CPI inflation expected to decline to 2.1% in 2025 from 2.4% in 2024. The growth in rental income will be more moderate but bolstered by strong demand in residential segments, particularly in Germany and Sweden, where housing shortages persist. Retail landlords are also poised to benefit from rising disposable incomes as inflation subsides, following a successful period of rent adjustments linked to inflation.

Valuations across most asset classes have stabilized, except for nonprime offices, which continue to face challenges due to rising vacancies and obsolescence. Since mid-2022, European REIT asset valuations have declined by an average of 10%, with nonprime offices experiencing the steepest devaluations. The European Central Bank (ECB) is expected to reduce its deposit rate to 2.5% by mid-2025, which should support stable long-term rates and limit further impact on property yields.

Transaction volumes are predicted to increase in 2025 as funding conditions improve and repricing reduces the price gap between buyers and sellers. Although transactional activity in 2024 remained 41% below the five-year average, large institutional investors are likely to re-enter the market, reversing the low levels of activity seen in 2023. Improved liquidity and reduced risk of distressed sales are expected to further support market recovery.

Despite challenges, credit metrics for European REITs show resilience. Interest coverage ratios (ICRs) are expected to stabilize around 3.3x by the end of 2025, reflecting hedged debt profiles and declining borrowing costs. Debt-to-EBITDA ratios are also projected to improve as rental income grows and debt-funded investments remain limited. However, risks remain, including the possibility of opportunistic acquisitions and dividend increases delaying deleveraging.

Environmental requirements pose additional challenges, as European REITs work toward ambitious decarbonization goals. The EU’s revised Energy Performance of Buildings Directive, effective since May 2024, mandates significant renovations to align with the bloc’s 2050 decarbonization target. These requirements could weigh on REITs’ balance sheets, necessitating substantial investments in the coming years.

While geopolitical and economic uncertainties persist, the sector is poised for continued recovery in 2025, driven by stabilizing valuations, improving credit conditions, and strong rental income performance across most segments.

Source: S&P Global Ratings

Poland: MPC warns of prolonged inflation above target due to energy price unfreezing

The unfreezing of energy prices in the second half of 2025 may extend the period during which inflation remains above the National Bank of Poland’s (NBP) inflation target, according to a statement from the Monetary Policy Council (MPC) following its latest meeting.

The MPC emphasized that inflation is expected to stay significantly above the NBP target in the coming quarters, driven by the effects of prior energy price increases, higher excise tax rates, and rising prices for administered services. Core inflation is also projected to remain elevated, primarily due to high wage dynamics, including public sector salary increases, and persistently strong service price growth.

The Council highlighted uncertainties related to the impact of heightened inflation on inflation expectations and wage pressures, especially given the anticipated economic recovery and Poland’s low unemployment levels. While the current level of interest rates is deemed conducive to achieving the inflation target over the medium term, the MPC noted that further fiscal and regulatory actions would also influence inflation trends.

Looking ahead, the Council expects inflation to return to the NBP target as wage dynamics gradually decline. The NBP reaffirmed its commitment to taking necessary measures to ensure macroeconomic and financial stability, including interventions in the currency market if required, to support the medium-term return of inflation to the target.

Assessing the economic situation in late 2024, the MPC observed an increase in GDP growth during the fourth quarter. Retail sales growth accelerated in November, although industrial and construction output showed negative annual dynamics. Employment in the enterprise sector fell slightly compared to the previous year, but unemployment remained low, and working hours were high. Wage growth continued at a robust pace.

The MPC decided to keep the NBP interest rates unchanged, with the basic reference rate remaining at 5.75%. Future decisions will depend on updated information regarding inflation and economic activity trends.

A press conference featuring Adam Glapiński, President of the NBP and the MPC, is scheduled for Friday, 17 January, at 3:00 PM.

Source: MPC and ISBnews

Aachener Grundvermögen extends partnership with Sonae Sierra for Münster Arcades’ 20th anniversary

The Münster Arkaden, a premier shopping destination in the heart of Münster, is celebrating its 20th anniversary with a significant milestone: Aachener Grundvermögen, the property owner, has extended its management contract with Sonae Sierra, reaffirming a long-standing partnership. The agreement encompasses center and property management, leasing, and marketing.

Sonae Sierra, which previously owned the Münster Arkaden, has managed the mixed-use property on behalf of Aachener Grundvermögen since 2012. Under its stewardship, the center, spanning approximately 38,000 square meters, has continued to thrive in Münster’s competitive retail landscape.

In 2024, the Münster Arkaden achieved its highest sales since opening, along with increased visitor numbers and a 99% occupancy rate. The leasing market also saw success, with 14 new agreements signed, including deals with international brands and renewed contracts with key anchor tenants.

Sustainability has been a key focus of Sonae Sierra’s management, with notable achievements such as reducing electricity consumption by one-third since 2010 and district heating needs by 50% over the past decade. The recycling rate has also risen to 87% since 2014, contributing to a reduction in ancillary rental costs and strengthening the property’s long-term appeal.

Christine Hager, Director of Property Management at Sonae Sierra in Germany, emphasized the company’s expertise in retail and shopping center management, noting, “We are committed to maximizing the potential of the Münster Arkaden, creating value for investors, tenants, and the city of Münster. We greatly appreciate the trust Aachener Grundvermögen has placed in us.”

Aachener Grundvermögen also highlighted the importance of the partnership. “With Sonae Sierra, we have one of Europe’s most renowned retail property experts by our side. The Münster Arkaden is a first-class property in a prime location, offering attractive options for all generations. We value our collaboration with the Sierra Germany team and look forward to continuing this successful partnership,” said Dorothea Theis, Head of Real Estate Management at Aachener Grundvermögen.

As the Münster Arkaden marks two decades of success, the renewed partnership between Aachener Grundvermögen and Sonae Sierra ensures the property remains a cornerstone of Münster’s city center and a benchmark for sustainable retail management.

Czech renewable energy subsidies criticized as discriminatory by industry leaders

The revised subsidies under the New Green Savings Programme (NGS) for renewable energy sources have sparked controversy, with the Renewable Energy Chamber accusing the changes of being discriminatory and unbalanced. The updated rules reduce support for domestic photovoltaic systems by lowering the maximum subsidy amount and capping the capacity for eligible installations at five kilowatts, half the previous limit. The Ministry of Environment (MoE) defended the changes, arguing they aim to create a fairer and more accessible system.

The chamber has criticized the new approach, particularly the preference given to insulation and other energy-saving measures at the expense of household photovoltaics. According to the chamber’s president, Štěpán Chalupa, these changes are unjustifiable, and the ministry’s reasoning of limited funds is unfounded. He suggested reallocating funds from other projects, such as the seven billion CZK designated for large-scale battery storage facilities, which he claims have sufficient returns without state support. Chalupa argued that if the government supports large-scale solar projects, household systems should receive equivalent treatment.

The chamber proposed adjustments to the NGS programme, including removing the five-kilowatt cap, maintaining subsidies at 50% of eligible costs, and simplifying terms for heat pump subsidies. Despite the criticism, the Ministry of Environment rejected the claims of discrimination. Ministry spokesperson Vendula Krejčí stated that the changes aim to level the playing field among renewable energy technologies, simplify processes, and expand the programme’s reach. She emphasized that subsidies for households remain significantly higher than for companies and that the ministry continues to consult with industry stakeholders.

Industry representatives fear the new conditions will weaken interest in renewable energy, particularly among households. Radek Orság, a board member of the Guild of Accumulation and Photovoltaics (CAFT), estimates that 40% of applicants may fail to meet the programme’s property test under the revised rules. He predicts that the number of applications could fall by more than half compared to the 2,500 monthly average recorded last autumn.

Meanwhile, other experts, such as Jan Fousek, director of the Association for Energy Storage (AKU-BAT), stressed the importance of large-scale battery storage and solar parks for decarbonization and the modernization of the Czech economy. However, Fousek warned against reallocating funds from the Modernisation Fund to the NGS programme, cautioning that it could disrupt existing and future subsidy initiatives.

In 2024, the Czech Republic saw 44,593 new photovoltaic plants commissioned, a significant drop from the 82,699 installed in 2023. However, the total installed capacity of 967 megawatts matched the record high of the previous year. The Solar Association of the Czech Republic attributes the trend to a decline in single-family home installations, offset by a rise in larger and business installations.

The debate highlights tensions between fostering household renewables and supporting large-scale energy transition projects, with industry leaders and policymakers divided on how best to allocate resources for sustainable development.

Source: CTK

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