Issuance activity: Tomorrow, MinFin is scheduled to auction CZK2.0bn of 2029 bonds and CZK4.0bn of 2036 bonds. The April’s calendar indicates a total supply of CZK15.0bn of CZGBs, while the total issuance for 2Q has been reduced to only CZK50.0bn. Total tap sales in the primary and secondary markets combined reached CZK123.6bn year to date. With total full year indication of CZK400-500bn, the issuance is likely to accelerate considerably in 2H26 should the 2Q indication be met.

Issuance activity: Tomorrow, MinFin is scheduled to auction CZK2.0bn of 2029 bonds and CZK4.0bn of 2036 bonds. The April’s calendar indicates a total supply of CZK15.0bn of CZGBs, while the total issuance for 2Q has been reduced to only CZK50.0bn. Total tap sales in the primary and secondary markets combined reached CZK123.6bn year to date. With total full year indication of CZK400-500bn, the issuance is likely to accelerate considerably in 2H26 should the 2Q indication be met.

Market situation: Czech rates continue to follow trends in core markets, which are primarily driven by swings in sentiment induced by the conflict in the Middle East. ASWs remain relatively tight from a 90D perspective and have changed little compared to last week. Today, Czech CPI inflation came in at 1.9% yoy in March. The rise from 1.4% yoy in February is primarily attributable to fuel prices, but core inflation also could picked up. Given the trend in energy prices, we expect inflation to continue rising in the coming months, exceeding 2% in April and remaining above the CNB’s target for the rest of the year. Further information on the potential impact of higher oil prices on the Czech economy can be found here: https://bit.ly/Oil_shock_EN.

Rates outlook: Given that the CNB is relatively well positioned to navigate the oil price shock with a slightly restrictive policy rate and headline inflation close to the target, we expect the CNB to wait for more clarity rather than act pre-emptively at this stage. Rate hikes may only be on the table if there are significant second-round effects on other components of inflation. For now, we are keeping our call for CNB policy unchanged and therefore continue to expect interest rates to remain on hold until the end of the year.

Colt CZ reported stable revenue of CZK7.33bn for the fourth quarter of 2025. EBITDA reached CZK1.38bn, an increase of 12% yoy, and exceeded market consensus by +7.5%. Adjusted EBITDA was CZK1.23bn (-22% yoy). Net profit was CZK585m (-8.7% yoy), which was +23% above market estimates. Revenue growth was driven by the ammunition segment, particularly in Europe. However, the commercial market in the U.S. remains weak, though the ammunition sector has managed to offset this. Full-year results met Colt’s targets. The proposed dividend of CZK30 exceeded both our expectations and market estimates. Another surprisingly positive development is Colt’s outlook for this year, which projects EBITDA growth of +13%, surpassing the market's expectations. We anticipate an upward revision of the market consensus.

Colt CZ reported stable revenue of CZK7.33bn for the fourth quarter of 2025. EBITDA reached CZK1.38bn, an increase of 12% yoy, and exceeded market consensus by +7.5%. Adjusted EBITDA was CZK1.23bn (-22% yoy). Net profit was CZK585m (-8.7% yoy), which was +23% above market estimates. Revenue growth was driven by the ammunition segment, particularly in Europe. However, the commercial market in the U.S. remains weak, though the ammunition sector has managed to offset this. Full-year results met Colt’s targets. The proposed dividend of CZK30 exceeded both our expectations and market estimates. Another surprisingly positive development is Colt’s outlook for this year, which projects EBITDA growth of +13%, surpassing the market's expectations. We anticipate an upward revision of the market consensus.

The revenue for 4Q25 was CZK7.3bn (-1% yoy). The number of firearms sold decreased by 4.2% yoy to 163,000. Although Colt brand sales declined due to a weak U.S. market, CZ brand sales increased, offsetting the decline. Ammunition sales were strong. In 4Q25, ammunition sales grew by +19.7% yoy, offsetting the decline in the firearms business (-15.2% yoy). Sales in the Czech Republic and the rest of Europe were crucial. Together, these two markets accounted for nearly 70% of quarterly revenue. In the Czech Republic (+87% yoy and 36.6% of total revenue) deliveries to the Czech Army were a key factor. In the rest of Europe, the ammunition sector drove results (-8.4% yoy and 31.8% of total revenue). Unfortunately, weakness in the U.S. commercial market remains evident. Revenues in this sector fell 44% yoy, accounting for only 19.2% of total revenue. This represents a significant decline from 34% in 4Q24. The six-week U.S. government shutdown also negatively impacted results.

2025 Results: For the full year, Colt CZ reported revenue of CZK23.4bn (+4.6% yoy) and EBITDA of CZK4.8bn (+38% yoy). This growth was primarily driven by the ammunition sector, where organic growth and full consolidation (S&B since May 2024) had positive impact. Adjusted EBITDA reached CZK4.7bn (+1.4% yoy). Thus, Colt CZ's management met its revenue and EBITDA targets of CZK23–24.5bn and CZK4.5–4.8bn, respectively.

Leverage (net debt/EBITDA) at the end of 2025 surprisingly fell to 1.80x (2.26x in 2024). The decline is due to the company’s ability to generate strong cash flow. According to Colt, the NCL acquisition, which will be paid for in January 2026, will not have a significant impact on leverage.

Dividend: Colt proposed a dividend of CZK30 per share, which equates to a gross yield of +3.5% and a payout ratio of 89%. Our forecast estimated the dividend at CZK26.5, whereas the market expected only CZK15.

2026 Guidance: This year, Colt aims to increase revenue by +35% yoy to CZK30–33bn and EBITDA by a substantial +67% yoy to CZK7.4–8.2bn. This is significantly (+13.3%) above the market estimate (CZK30.8bn and CZK6.9bn) and our projection (CZK33.5bn and CZK7bn). The growth would be driven by the consolidation of operations from the acquired company NCL (energy materials) and the deferral of revenue from the end of 2025 to 2026.