The GDP flash estimate published by the statistical office shows that the economy grew 1.0% qoq and 2.9% yoy. That does not correspond  to the history of the times series, so we can expect some minor upward revision of the past data in the next release. Comparing the qoq growth dynamics in the region, the Czech economy ranked just behind Hungary, which leads the imaginary ranking of the region. According to the statistical office, both, domestic and external demand contributed to growth. Our estimates suggest investment activity was the most important factor followed by domestic consumption. Besides the very nice headline figure, the statisticians stated that employment growth was 0.4% qoq. Thus, despite the very tight labour market, it seems the economy still has hidden reserves.

The GDP flash estimate published by the statistical office shows that the economy grew 1.0% qoq and 2.9% yoy. That does not correspond  to the history of the times series, so we can expect some minor upward revision of the past data in the next release. Comparing the qoq growth dynamics in the region, the Czech economy ranked just behind Hungary, which leads the imaginary ranking of the region. According to the statistical office, both, domestic and external demand contributed to growth. Our estimates suggest investment activity was the most important factor followed by domestic consumption. Besides the very nice headline figure, the statisticians stated that employment growth was 0.4% qoq. Thus, despite the very tight labour market, it seems the economy still has hidden reserves.

The Czech economy showed resilience to the German slowdown. Germany just evaded a recession in the second half of the year. Already domestic monthly indicators showed that the Czech economy continued in sound shape. The dynamics in industry eased a bit, but external trade printed very good results.            

The Czech economy added 3% last year. The main drivers were private consumption and strong investment. Investment activity was supported by the public sector, which tapped a big volume of EU funds.

The economy should continue growing at a pace around its potential. We expect external demand to stabilise after a wild second quarter of the year. Domestic consumption remains sound, as we expect it to print 3.2% this year. In contrast, investment activity will decelerate. It will fight with strong base effects and a slower inflow of EU funds. Overall, we expect the economy to expand 2.7% after last year’s 3.0%.

Strong economic growth, accelerating inflation and the weak koruna suggest that rate hikes will come earlier than analysts currently expect. We tend to believe that it might come already in March. The koruna reacted with an appreciation of more than five hellers.

The management of media company CME presented its outlook for 2019 and the possibility of a dividend payment during yesterday’s conference call on quarterly results. The management expects OIBDA growth of 10% to 12% at constant exchange rates, which would result in OIBDA between $245m and $249m for 2019. In our valuation model, our assumption of OIBDA growth was approximately 10%. The CME outlook is quite a positive surprise for us.

The management of media company CME presented its outlook for 2019 and the possibility of a dividend payment during yesterday’s conference call on quarterly results. The management expects OIBDA growth of 10% to 12% at constant exchange rates, which would result in OIBDA between $245m and $249m for 2019. In our valuation model, our assumption of OIBDA growth was approximately 10%. The CME outlook is quite a positive surprise for us.

Especially, we assess very positively the outlook for lower indebtedness. In 2019, CME management expects cash paid for interest and guarantee fees to be less than $27m, which is almost half the amount as in 2018. This is given the effort of reducing indebtedness. At the end of 2018, the net leverage ratio equaled 3.5x. Last week, CME made an extraordinary repayment of debt in the amount of €60m (i.e. $68m). Even due to this the net leverage ratio should reach 3.0x by the end of 1Q. Based on the management’s assumption, the ratio should reach 2.5x by the end of 2019. The breakeven value is 2.75x, at which point CME is capable of paying dividends or making a share buyback. This was also mentioned during the conference call. The management didn’t go into further detail about which of these two options is more likely. They will reveal more during the year as new quarterly results are presented.

Another interesting topic mentioned during the call was the current situation in Romania regarding sector taxes. This is perceived by the management as negative for the Romanian economy, but it does not expect a significant impact on the company’s performance. The whole situation concerns primarily sector taxes in the financial and telecommunication sectors. Telecommunication companies in particular are a significant advertiser on television. Only if there were a reduction of advertising expenses of these companies would it have a negative impact on financials of the Romanian segment.

Overall, we assess the conference call including the outlook for 2019 as positive.