Czech inflation fell from 2.1% yoy in December to 1.6% yoy in January. This was in line with our estimate, the market consensus and the central bank’s forecast. The structure of January inflation also broadly matched our expectations.

Czech inflation fell from 2.1% yoy in December to 1.6% yoy in January. This was in line with our estimate, the market consensus and the central bank’s forecast. The structure of January inflation also broadly matched our expectations.

Cheaper energy was the main factor behind the decline in inflation below the central bank’s 2% target. According to our estimates, the transfer of renewable energy payments, which are part of electricity prices, from households to the state, contributed to a reduction in annual inflation of around 0.3pp in January. This was coupled with the ongoing decline in market electricity and gas prices, the next round of which began with the start of this heating season. Consequently, household electricity prices dropped by an average of 12.2% yoy in January, with gas prices falling by 6.5% yoy. In contrast, water and sewage prices increased by almost 4% yoy, while heating and hot water prices rose by 2.5% yoy.

Fuel and food prices also contributed to lower inflation. Fuel prices fell by 2.6% mom in January, following a 1.9% mom decline in December. Combined with the higher comparative base from the beginning of last year, fuel prices dropped significantly by 9% yoy in January. Food price growth, including all beverages and tobacco, remained close to 2% yoy, having slowed at the end of last year. Prices for food and non-alcoholic beverages alone increased by just 1.3% yoy. This reflects cheaper energy and fuel, as well as a more favourable agricultural harvest. Furthermore, the stronger koruna is driving down the prices of all imported goods, including food. Food prices rose by around 3% mom in January, but this was largely due to the traditional seasonal effect, also associated with fading pre-Christmas sales.

Services and core inflation remain high. Growth in service prices was unchanged from December, reaching 4.7% yoy in January. The month-on-month increase in service prices averaged 1%, which is as high as in January 2025 and also indicates no slowdown. The rapid rise in housing prices continued to have a significant impact, with annual imputed rent growth accelerating slightly for the second consecutive month to reach 5.1% in January. However, the increase in service prices may also have been influenced by the recovery in consumer demand at the end of last year. Consequently, core inflation slowed only slightly, from 2.8% yoy in December to 2.7% yoy in January, remaining close to the upper limit of the central bank’s tolerance band. January’s core inflation was in line with our estimate and only slightly below the CNB’s forecast of 2.8% yoy. Meanwhile, the fall in goods prices (including food, energy and fuel), supported by the strong koruna, continued to offset the rapid growth in service prices, with a 0.4% yoy decline in January.

We do not expect the CNB to cut interest rates this year, as the decline in inflation below 2% is likely to be only temporary. According to our forecast, annual inflation will remain below the central bank’s 2% target throughout this year, averaging 1.6%. However, we expect core inflation to remain elevated at 2.3% in 2026. Next year, we forecast headline inflation to rise above the target, averaging 2.3%. Core inflation will accelerate to 2.4% in 2027, in our view. This should be due to expansionary fiscal policy combined with a surprisingly strong and rapidly growing Czech economy. As a result, we expect the CNB to remain on hold until year-end.

Kofola published its revenues and EBITDA for 4Q25 and FY25. Revenues for 4Q25 reached CZK2.58bn, corresponding to a yoy decline of 1%. EBITDA increased by +48% to CZK389m. Overall, the results exceeded market consensus by +2.9% in sales and +4.6% in EBITDA.

Kofola also slightly surpassed its updated full-year projection. EBITDA for 2025 reached CZK1.79bn on sales of CZK10.75bn.

Kofola published its revenues and EBITDA for 4Q25 and FY25. Revenues for 4Q25 reached CZK2.58bn, corresponding to a yoy decline of 1%. EBITDA increased by +48% to CZK389m. Overall, the results exceeded market consensus by +2.9% in sales and +4.6% in EBITDA.

Kofola also slightly surpassed its updated full-year projection. EBITDA for 2025 reached CZK1.79bn on sales of CZK10.75bn.

Quarterly results: Kofola reported strong yoy EBITDA growth of +48% to CZK389m (our calculation) for 4Q25, despite a 1% yoy decline in sales to CZK2.58bn. The margin increased by +5.0pps to 15.1%. It therefore appears that Kofola achieved its results thanks to cost-cutting measures.

Full-Year Results: Sales for the fell by 3% yoy last year, reaching CZK10.75bn. EBITDA was CZK1.79bn, a 3.2% decrease yoy. The non-alcoholic beverage business was negatively impacted by the sugar tax introduced in Slovakia in 2025, with sales decreasing by 10% yoy. Pre-stocking at the end of 2024 affected the figures at the beginning of last year. Price increases negatively impacted demand. Unfavourable weather also had an impact. Breweries declined at the same rate due to the weather and a decline in exports. In the Adriatic region, results were only slightly lower yoy. The beverage business decline was partially offset by UGO and Leros's (Fresh & Herbs) historic figures, where coffee and herb operations helped. This business is immune to weather fluctuations.  

With its reported figures for the whole of 2025, Kofola slightly exceeded (+1% and +2.3%) its updated EBITDA target of CZK1.75bn and -4% yoy in sales. However, the company did not achieve its original EBITDA target of CZK1.9-2.0bn or its goal of +3% yoy revenue growth. Reported results were more or less in line with our expectations (+0.3% and +0.4%, respectively).

Leverage (net debt/EBITDA) at the end of last year was 3.06x. This is practically unchanged compared to 9M25 (2.14x at the end of 2024).

2026 guidance: Kofola expects EBITDA to be between CZK1.8-1.9bn, which is a +3.4% yoy increase, and revenue growth of +10% yoy this year. These targets include the recent acquisitions. Leverage is expected to be 3.0x, and the dividend to be in the range of CZK13.5-21. This offers a gross yield of up to +4.4%. However, the targets are weaker than our projections. We expect EBITDA of CZK1.99bn (+11.4% yoy) and revenues of CZK11.5bn (+7.4% yoy). Our projections do not include acquisitions. Our dividend expectations were also more optimistic, at CZK21.8.