February’s industrial production figures confirmed that the cyclical recovery of the Czech industry is continuing. Growth was widespread. The computer and optical equipment manufacturing sector performed well, as did the automobile industry. However, electricity production was negatively affected by planned outages. The construction sector also posted solid results in February. The yoy improvement was primarily driven by building construction, while growth momentum weakened in civil engineering. Domestic retail sales (excluding car sales) stagnated in February after a period of strong growth in the previous two months. Czech foreign trade fell short of expectations. Nevertheless, it remained in solid surplus. Overall, February data confirmed the ongoing gradual recovery of the domestic economy. However, the current energy crisis poses a risk to future developments.

February’s industrial production figures confirmed that the cyclical recovery of the Czech industry is continuing. Growth was widespread. The computer and optical equipment manufacturing sector performed well, as did the automobile industry. However, electricity production was negatively affected by planned outages. The construction sector also posted solid results in February. The yoy improvement was primarily driven by building construction, while growth momentum weakened in civil engineering. Domestic retail sales (excluding car sales) stagnated in February after a period of strong growth in the previous two months. Czech foreign trade fell short of expectations. Nevertheless, it remained in solid surplus. Overall, February data confirmed the ongoing gradual recovery of the domestic economy. However, the current energy crisis poses a risk to future developments.

In February, Czech industrial production rose by 1.3% mom and by 1.3% yoy in real terms. This was slightly higher than we and the market expected. Due to the cyclical recovery of the domestic industry, we remain positive about this year’s outlook. However, the current rise in energy prices poses a risk. Nevertheless, it should be noted that the energy intensity of Czech industry has fallen significantly in recent years, which should bolster the sector’s resilience.

The manufacturing sector recorded a strong mom increase of 1.9% in February. Significant contributions came from the production of computers, electronic and optical equipment (up 8.1% mom) and pharmaceutical products (up 6.0% mom). There was strong growth in production of wood (+10.1% mom) and other non-metallic mineral products (+8.5% mom). Motor vehicle production also increased mom (+2.5%). In contrast, declines were recorded in electricity, heat and gas production and distribution (-5.6% mom), due to planned outages at some power plants, and in the production of other transport equipment (-7.0% mom).

In February, the value of new orders at current prices increased by 1.6% yoy. New orders from abroad increased by 2.5%, while domestic new orders fell by 0.3%. Compared to January, the value of new orders fell by 6.0%, mainly due to the high base in the automotive industry that month. Yoy growth in the value of new orders was most influenced by the machinery and equipment manufacturing sector.

February’s data confirmed that the cyclical recovery of the Czech industry is ongoing. However, developments in energy markets pose a risk, particularly if energy prices remain at elevated levels for an extended period. Higher natural gas prices are having a greater impact on domestic industry than oil prices. Although Czech industry is one of the least dependent on oil products in Europe from an energy perspective, it is significantly more dependent on natural gas (nearing the EU average). Conversely, the German fiscal package should have a positive impact this year.

Domestic retail sales, excluding car sales, were flat in February, following a brisk pace of growth in the previous two months. Compared to last year, sales in the non-automotive segment increased by 4.1%. The market consensus had predicted growth of 3.8%, but we had expected a correction due to the decline in household confidence at the beginning of the year, so our estimate was lower at 3.5%. Nevertheless, the stagnation of non-automotive sales mom and the slight 0.1% increase in services sales confirm that consumer demand remains robust.

From a structural perspective, February’s performance was less clear-cut than January’s. After a period of strong growth, sales of non-food goods and fuel declined slightly in February (by 0.2% mom), while sales of food goods increased by 0.4% mom. Although February’s data did not indicate a strengthening of consumer demand momentum in the first quarter of this year, the level remains solid. However, the conflict in the Middle East and rising energy prices may influence future developments. Despite these factors, March consumer confidence rose compared to February and remains well above the long-term average.

Growth of 1.7% mom in the automotive segment drove overall retail sales growth of 0.5% mom in February, thereby correcting the sharp decline seen at the start of the year. Compared to last year, sales in this segment increased by 0.9% in February, lagging significantly behind the growth in sales outside the automotive sector.

At the start of this year, sales growth in services lacks momentum and remains subdued. After January’s stagnation, there was only a slight 0.1% mom increase in real terms. However, February was mixed across sectors. Real sales declined in transportation and warehousing, accommodation and food services, and information and communication activities, while the real estate sector, professional, scientific, and technical activities, and administrative and support services recorded growth.

Consumer demand is supported by strong fundamentals this year, but its trajectory in the coming months may be more volatile due to the negative impact of rising energy prices on consumer sentiment. Despite growing concerns about rising prices, household confidence strengthened in March. Moreover, households are entering this year with a high savings rate, which reached 19.7% in the fourth quarter of 2025, along with continued robust wage growth and lower energy prices due to government measures.

Foreign trade results in February fell short of expectations.

The foreign trade balance showed a surplus of CZK 19.3 billion in February, representing a year-on-year decline of CZK 11 billion. Even after seasonal adjustment, the result was roughly half that of February last year, with exports rising by 1.0% month-on-month and imports by 3.1%.

As in January, the trade surplus in February was primarily driven by a smaller deficit in oil and natural gas trade. This deficit decreased by CZK 3.3 billion compared to last year. However, given that the price of Brent crude oil has risen from approximately $70 to over $110 per barrel and the price of natural gas has risen from €30 to over €50 per MWh since the start of the conflict in the Middle East, this category is likely to result in weaker foreign trade figures in the coming months. In February, the trade surplus in metal products increased significantly (by CZK 2.3 billion). The surplus in other transport equipment and machinery also rose (by CZK 0.9 billion). However, the overall balance was negatively affected by the widening of the trade deficit in computers, electronic and optical equipment (by CZK 6.2 billion). The trade balance for motor vehicles deteriorated by CZK 2.1 billion and for electricity by CZK 2.0 billion.

Our latest forecast projected that the foreign trade surplus would reach CZK 220 billion this year. However, given the current oil shock, the deficit in oil and natural gas is likely to widen in the coming months, which could result in an even worse overall foreign trade balance. On a positive note, the Czech economy is entering this challenging period in relatively good shape. It has also significantly reduced its energy intensity in recent years, and the rapid growth in exports of equipment and services linked to the AI technology boom is another positive factor.

The construction sector is gradually reviving, but the road to growth is rocky

Czech construction output increased by 3.5% mom in February. According to the Czech Statistical Office, which publishes mom dynamics for the trend cycle, output increased by 0.8%. Compared with February last year, production grew by 4.1%, whereas in January it declined by 1.5%.

Yoy growth was mainly driven by building construction. Its output increased by 7.8% in February, following a decline of 2.0% yoy in January. This was driven not only by a lower base of comparison, but also by a strong mom increase of 5.1%. However, growth momentum weakened in civil engineering. After production increased by a slight 0.2% in January, it declined by 5.5% yoy in February. The base effect also played a partial role here, however, as civil engineering production rose by 0.7% mom in February.

Although the number of newly issued building permits increased from January to February, it was still the second-lowest February figure on record. The number of building permits issued in February this year was 4,676, the second-lowest February figure since 2002, after last February’s 4,385. While the number of building permits issued in February this year rose by 6.6% yoy, the floor area of newly permitted buildings increased by a more significant 20.1% yoy. This confirms ongoing structural changes in construction, with apartment buildings being prioritised over single-family homes. This may be due to the complicated building permit process, which individual builders are reluctant to undergo, or to the continuing rise in real estate and building land prices, which is leading to greater interest in cheaper apartments at the expense of more expensive single-family homes.

The recovery in the construction sector remains fragile. Support should continue to come from increased government investment, particularly in transport infrastructure. However, according to available data, momentum has slowed in recent months. At the same time, strong household demand for real estate persists, a trend further fuelled by the recent drop of interest rates. However, mortgage rates have risen again in the past month due to increased inflationary risks linked to the conflict in the Middle East.

Moreover, significantly higher energy commodity prices and restrictions on maritime transport pose a potential risk of price increases for construction materials. Added to this are cuts in government subsidies for improving the energy efficiency of buildings. These factors may curb demand for real estate, particularly for new construction and renovations of single-family homes. There may also be greater market concentration, with better-capitalised real estate developers strengthening their position relative to smaller construction firms, as there is greater interest in apartments at the expense of single-family homes.

Colt CZ is holding a General Meeting today (April 10, 2026, at 2:00 p.m.). At the meeting, shareholders are expected to approve an application to list Colt CZ shares on the Euronext Amsterdam stock exchange. The company also plans to increase its capital.

The proposed dividend of CZK30 per share will not be voted on at the upcoming General Meeting. It will be on the agenda of the General Meeting in June.

The purpose of the dual listing is to increase liquidity and attract investors. Shares will trade on the Prime Market in Prague and, concurrently, on Euronext Amsterdam's regulated market. The shares will be fully interchangeable on both exchanges.

The expected approval of the capital increase will fund technology, modernization, expansion of production capacity, R&D, M&A and debt reduction. Colt CZ will issue a maximum of 9,395,586 new shares. The price range has been set at CZK600–1,500. The Board of Directors may increase the capital several times, but only up to the stated amount. Only new shares will be sold. The stated number of new shares represents 15% of the current total.

Colt CZ is holding a General Meeting today (April 10, 2026, at 2:00 p.m.). At the meeting, shareholders are expected to approve an application to list Colt CZ shares on the Euronext Amsterdam stock exchange. The company also plans to increase its capital.

The proposed dividend of CZK30 per share will not be voted on at the upcoming General Meeting. It will be on the agenda of the General Meeting in June.

The purpose of the dual listing is to increase liquidity and attract investors. Shares will trade on the Prime Market in Prague and, concurrently, on Euronext Amsterdam's regulated market. The shares will be fully interchangeable on both exchanges.

The expected approval of the capital increase will fund technology, modernization, expansion of production capacity, R&D, M&A and debt reduction. Colt CZ will issue a maximum of 9,395,586 new shares. The price range has been set at CZK600–1,500. The Board of Directors may increase the capital several times, but only up to the stated amount. Only new shares will be sold. The stated number of new shares represents 15% of the current total.