Price growth did not avoid the Czech Republic, even in March. Significant growth in prices continued in industry, agriculture, construction and trade services. Last year's poor harvest will continue to push agricultural prices upward. Likewise, the excess of demand over supply will allow builders to charge higher prices. This suggests that inflationary pressures in the domestic economy will remain strong. Our forecast of the central bank hiking interest rates twice this year thus remains unchanged.

Price growth did not avoid the Czech Republic, even in March. Significant growth in prices continued in industry, agriculture, construction and trade services. Last year's poor harvest will continue to push agricultural prices upward. Likewise, the excess of demand over supply will allow builders to charge higher prices. This suggests that inflationary pressures in the domestic economy will remain strong. Our forecast of the central bank hiking interest rates twice this year thus remains unchanged.

Industrial producer prices continued to grow in March. In month-on-month terms they added 0.5%, which represents an increase of 3.8% yoy. Mainly higher oil prices push prices in industry higher. At the beginning of March, oil prices stood at around $65. At the end of March, however, they were $5 higher. Besides the prices of refined petroleum products, electricity, transmission, distribution and trade prices of electricity rose significantly (+ 1.3% mom), as well. Price growth did not avoid agriculture, either. Production there was 0.3% more expensive mom and 8.1% yoy. Prices of crop production rose the most. This is due to last year’s poor harvest, which will probably continue to push up prices in this sector.

Price increases continued in the construction sector, as well. This is not surprising given the high overhang of demand for construction works over supply. Thanks to this luxury, builders will can continue to ask for higher prices. Construction work prices rose 0.9% mom. In yoy terms, their dynamics reached 4.8%, while in February they were still 4.0%.

Trade services recorded a price increase, too. Prices increased 1.1% mom. Advertising prices rose the most (11%). Service producer prices in the business sphere, however, grew even after the adjustment of this category (0.5%).

Higher prices in industry and agriculture also push consumer inflation higher. This reached the upper bound of the central bank’s inflationary band (3%) in March and will likely stay there in April. Today’s statistics also confirmed that inflationary pressures in the domestic economy remain strong. This is why we expect the Czech National Bank to hike rates two times this year.

Results: As we have previously mentioned, the company Avast will not release a full version of the company’s results for 1Q and 3Q. Avast will provide only a short version of results without any explanation of momentum factors. Our estimates for 1Q19 were slightly more cautious, which is why all estimated result items were exceeded. Adjusted revenue grew 6.1% to $211.8m. Profitability measured as adjusted EBITDA rose 5.4% to $117.5m. The adjusted EBITDA margin year to date reached 55.5%.

Results: As we have previously mentioned, the company Avast will not release a full version of the company’s results for 1Q and 3Q. Avast will provide only a short version of results without any explanation of momentum factors. Our estimates for 1Q19 were slightly more cautious, which is why all estimated result items were exceeded. Adjusted revenue grew 6.1% to $211.8m. Profitability measured as adjusted EBITDA rose 5.4% to $117.5m. The adjusted EBITDA margin year to date reached 55.5%.

Additional information: (1) In March, Avast voluntarily paid down $200m of debt using cash on balance sheet. Due to this, the leverage ratio calculated as net debt divided by adjusted cash EBITDA reached 2.3x at the end of March compared with 2.4x at the end of 2018. (2) The impact of IFRS 16 implementation on net debt (lease liabilities) is $69.6m (operating leases were moved from off-balance sheet to balance sheet). Without this effect of IFRS 16, the leverage ratio would decrease to 2.2x.

Potential impact on share price/recommendation: The company Avast reached quite solid results in 1Q19. Because of this, the management of the company reaffirmed its full-year guidance for high single-digit adjusted revenue growth and broadly flat adjusted EBITDA margin (pre-IFRS 16 adoption). As the presented results correspond with our expectations, we keep our target price and Buy recommendation.