Issuance activity: Tomorrow, MinFin is scheduled to auction CZK2.0bn of 2034 bonds, CZK4.0bn of 2035 bonds and CZK0.5bn of 2044 bonds. In December, MinFin plans to reduce issuance to just CZK6.0bn of CZGBs. This will, however, be supplemented by CZK5.0bn and EUR500m of T-bills. MinFin also continues to have a strong presence on the secondary market, having conducted switch operations for CZK45.8bn in 2H25, thereby lowering the expected issuance in 2026. Overall, we estimate the total financing needs to increase by at least a quarter in 2026, with risks skewed to the upside given the incoming government’s signals that the deficit may be even larger than the CZK320.0bn we assumed in our latest forecast.

Issuance activity: Tomorrow, MinFin is scheduled to auction CZK2.0bn of 2034 bonds, CZK4.0bn of 2035 bonds and CZK0.5bn of 2044 bonds. In December, MinFin plans to reduce issuance to just CZK6.0bn of CZGBs. This will, however, be supplemented by CZK5.0bn and EUR500m of T-bills. MinFin also continues to have a strong presence on the secondary market, having conducted switch operations for CZK45.8bn in 2H25, thereby lowering the expected issuance in 2026. Overall, we estimate the total financing needs to increase by at least a quarter in 2026, with risks skewed to the upside given the incoming government’s signals that the deficit may be even larger than the CZK320.0bn we assumed in our latest forecast.

Market situation: Market CZK interest rates and CZGB yields have declined over the past week, reflecting trends in core markets. As bonds have lagged the IRS move, several papers’ relative ASW valuations have become more attractive.

Rates outlook: We believe that the fiscal stimulus is set to push CZK market interest rates and bond yields up further, although the slowdown in the industrial sector may temporarily halt this trend. Regarding the CNB, we no longer anticipate further cuts to the repo rate, which is likely to remain at 3.5% for an extended period. This is even though headline inflation may temporarily fall below the 2% target in 2026 due to a decline in energy/administered prices.

Kofola reported an EBITDA of CZK727m (-1.1% yoy) for 3Q25, with revenues of CZK3.1bn (-7.5% yoy). While EBITDA is in line with expectations, revenues fell slightly short of the consensus by 3.2%. Kofola lowered its full-year EBITDA and revenue targets. This is due to unfavourable weather and the introduction of a sugar tax in Slovakia. Kofola's quarterly results came as no surprise. Unfavourable weather was anticipated, as was a decline in the full-year outlook.

Kofola reported an EBITDA of CZK727m (-1.1% yoy) for 3Q25, with revenues of CZK3.1bn (-7.5% yoy). While EBITDA is in line with expectations, revenues fell slightly short of the consensus by 3.2%. Kofola lowered its full-year EBITDA and revenue targets. This is due to unfavourable weather and the introduction of a sugar tax in Slovakia. Kofola's quarterly results came as no surprise. Unfavourable weather was anticipated, as was a decline in the full-year outlook.

Kofola's sales for 3Q25 amounted to CZK3.1bn. This represents a yoy decline of 7.5%. This decline is primarily due to a decrease in sales volume across all countries where Kofola operates (CZ -9.7% yoy, SK -13.4% yoy, SLO -11.6% yoy, CRO -5.7% yoy). This decline is primarily due to poor weather conditions and the implementation of a sugar tax in Slovakia. Due to the decline in exports, sales in the Beers & Ciders segment also decreased (-14.3% yoy). The UGO salad bars and Leros tea business (EBITDA growth of +3.6% yoy, sales growth of +17.5% yoy), which are immune to weather fluctuations, performed well. However, this is the smallest sector, which does not have a significant impact on the overall results. In terms of costs, personnel and sweetener costs decreased. Kofola also demonstrated cost discipline in other areas. EBITDA reached CZK727m in 3Q25, a 1.1% yoy decrease. The margin increased by +1.5pps to 23.4%. Financial costs and the effective tax rate were lower. Kofola reported a net profit of CZK396m, which is a +14% increase yoy.

The leverage ratio (net debt/EBITDA) is 3.08x for 9M25. This represents an increase from 2.82x in 1H25 and 2.14x at the end of 2024. Several factors have contributed to this growth. From our perspective, the decline in EBITDA is crucial. Furthermore, there is an increase in debt itself, which is related to acquisition activity (ASO Vending).

2025 Guidance: Kofola lowered its full-year projections. The main reason for this is unfavorable weather, which affected not only the summer months, but also the promising start to autumn. Another factor is the introduction of a sugar tax in Slovakia this year. There has also been a decline in exports in the Beers&Ciders sector. According to the current outlook, 2025 EBITDA should reach CZK1.75bn. This corresponds to a yoy decline of 5.5% and a 7.9% decrease compared to the previous projection (CZK1.9bn). These negative effects also affected the total revenue target, which is expected to decline by 4% this year. (The previous target was +1.5% growth). The leverage target was updated to 3.0x (from 2.5x.) This is mainly due to the expected decline in EBITDA.

Reported EBITDA for 9M25 is 80% of the FY target and 77% of the revenue forecast.

Kofola has traditionally published data for recent months. In October, sales decreased by 1% yoy, with volume down 7% yoy. This decline is most likely due to unfavourable weather conditions.