The average nominal wage in the Czech Republic increased by 7.4% yoy in 4Q25, up from 7.1% in the previous quarter. After seasonal adjustment, we estimate that this represents an increase in qoq wage growth from 1.2% to 1.9%, with extraordinary bonuses also likely contributing to the acceleration to some extent. From a sectoral perspective, yoy wage growth continues to be driven by the private sector where the average nominal wage increased by 7.8% yoy, compared to an increase of 6.4% in the public sector. After adjusting for inflation, the purchasing power of the average wage increased by 5.1% yoy in 4Q25. On a full-year basis, wages increased by an average of 7.2% in nominal terms in 2025 (the same as in 2023 and 2024) and by 4.6% in real terms.

The average nominal wage in the Czech Republic increased by 7.4% yoy in 4Q25, up from 7.1% in the previous quarter. After seasonal adjustment, we estimate that this represents an increase in qoq wage growth from 1.2% to 1.9%, with extraordinary bonuses also likely contributing to the acceleration to some extent. From a sectoral perspective, yoy wage growth continues to be driven by the private sector where the average nominal wage increased by 7.8% yoy, compared to an increase of 6.4% in the public sector. After adjusting for inflation, the purchasing power of the average wage increased by 5.1% yoy in 4Q25. On a full-year basis, wages increased by an average of 7.2% in nominal terms in 2025 (the same as in 2023 and 2024) and by 4.6% in real terms.

Real gross wages and household consumption reached pre-pandemic levels in 4Q25. After seasonal adjustment, real gross wages grew for eleven consecutive quarters on a qoq basis, thus erasing their decline from 2021 to 2023 after six years. However, the actual decline in purchasing power may have been partially underestimated given that the rising cost of living was partially offset by a reduction in labour taxation (through the abolition of super-gross wages) from 2021. The increase in employees’ purchasing power is reflected in household consumption, which was the main driver of growth in the domestic economy last year from an expenditure perspective.

Wage growth in 4Q25 slightly exceeded both the CNB’s forecast and the market consensus. The observed data were broadly in line with our prediction, as we had expected wage growth to be 0.1pp lower. The market median predicted real wage growth of 4.7% yoy, whereas the central bank predicted 4.8% yoy. The actual figure was thus 0.3pp higher than the CNB’s forecast due to higher wage growth in market sectors. Today’s data therefore slightly shifts the balance of risks of the CNB’s February forecast, which assumes the key repo rate to remain at 3.5% and increase in 2H26, in a pro-inflationary direction. Overall, given robust domestic demand, persistent inflationary pressures in services and increased uncertainty stemming from the conflict in the Middle East, we do not expect the CNB to cut interest rates in the coming months in the baseline scenario.

From a long-term perspective, real wages are broadly in line with the trend in labour productivity. Although they are growing steadily, we do not believe that this will cause excessive inflationary pressures in the near future. In our view, the convergence of wage and productivity trends will contribute to a slowdown in wage dynamics this year, when the average wage growth may exceed 6%. For the first time since 2021, the pandemic year, public sector salaries could also contribute more visibly to this, as we estimate them to outpace slightly private sector wages.

The proportion of employees in the services sector continues to grow at the expense of industry. After seasonal adjustment, the total number of employees converted to full-time equivalents remained virtually unchanged in the fourth quarter (an increase of 0.1%), but labour shifts between sectors continue.  Although the number of employees in industry has fallen continuously for more than three years, this has been offset by an increase in the services workforce, particularly in education, healthcare, and leisure services.

According to our estimates, CEZ will report an EBITDA of CZK33.9bn (-8.8% yoy) and a net profit of CZK5.3bn (-21% yoy) for 4Q25. We believe lower electricity prices are behind this decline. We expect CEZ to meet its full-year targets. This would imply a dividend of CZK41 per share from 2025 profits. Investors will focus on projections for this year.

Announcement date: Thursday, March 12, 2025, at 7:00 a.m. CET

According to our estimates, CEZ will report an EBITDA of CZK33.9bn (-8.8% yoy) and a net profit of CZK5.3bn (-21% yoy) for 4Q25. We believe lower electricity prices are behind this decline. We expect CEZ to meet its full-year targets. This would imply a dividend of CZK41 per share from 2025 profits. Investors will focus on projections for this year.

We expect a yoy decrease in sales of 9% to CZK91.5bn for the last quarter of last year. This reflects the decline in electricity prices. Last year (2025), the price was around EUR125/MWh; a year earlier (2024), it was higher, at around EUR135/MWh. Nuclear power plants produced +17% more electricity yoy in 4Q25, offsetting the estimated decline in production from coal sources. In Distribution, we expect similar performance in 4Q25 as in 4Q24. EBITDA will decline at a similar rate as revenues and will reach, according to our estimate, CZK33.9bn (-8.8% yoy). Depreciation should remain high due to the integration of GasNet and the accelerated depreciation of coal assets. We expect the effective tax rate to be 70% in 4Q25 (61% for all of 2025). 2025 is the last year a special tax (WFT) will be paid; therefore, effective tax rate should fall significantly in 2026. According to our model, net profit for 4Q25 should reach CZK5.3bn, a 21% yoy decline.

FY2025: According to our estimates, CEZ's EBITDA will be CZK137.1bn (-0.3% yoy) and its net profit will be CZK27.5bn (-13% yoy) for last year. These figures indicate that CEZ will meet its full-year targets of CZK132-137bn in EBITDA and CZK26-28bn in net profit. With an 80% payout ratio, the net profit would correspond to a dividend of CZK41 per share, which equates to a gross yield of +3.4%. Please note that the dividend proposal for 2025 profits may not be published in the 4Q25/2025 report. It should be published no later than one month before the AGM (June 23, 2025, last year).

We estimate Leverage (net debt/EBITDA) at 1.8x at the end of 2025 (1.5x in 9M25).

2026 Guidance: According to our expectations, CEZ should achieve an EBITDA of CZK112.5bn and a net profit of CZK37.4bn this year. This represents an 18% yoy decline in EBITDA and a +36% yoy increase in net profit. This is due to the expiration of the special tax (WFT) in 2025. 

Dividend: The expected net profit for 2026 indicates a dividend of CZK55 per share, which equates to a gross yield of +4.6%, with an 80% payout ratio. However, due to the absence of special taxes, a 100% dividend is also back in play. In this optimistic scenario, the dividend would be CZK69, corresponding to a yield of +5.7%.