Issuance activity: Tomorrow, MinFin is scheduled to auction CZK2.0bn of 2035 bonds and CZK1.0bn of 2043 floater. So far this year, MinFin has issued a total of CZK249.6bn CZGBs on the primary market (MinFin projects CZK270 370bn for the full year), as well as an additional CZK121.8bn on the secondary market. The issuance calendar for October indicates that CZK16.0bn will be sold on the primary market. However, the Ministry of Finance usually increases the amount issued compared to the amount indicated in the calendars, with the year-to-date total amount sold being roughly double the amount indicated. On Monday, the Czech government approved a state budget for 2027 with a deficit of CZK386bn, i.e. CZK3.0bn lower compared to the first draft of MinFin, which we analysed further in our special report: https://bit.ly/Budget_2027_EN. We estimate that this would lead to a widening of the total public finance deficit from 2.8% of GDP this year to 3.5% of GDP in 2027, intensifying the overall expansionary stance of the fiscal policy. Combined with other financing needs, we estimate that total gross CZGB issuance on financial markets will increase by around a quarter yoy in 2027.

Issuance activity: Tomorrow, MinFin is scheduled to auction CZK2.0bn of 2035 bonds and CZK1.0bn of 2043 floater. So far this year, MinFin has issued a total of CZK249.6bn CZGBs on the primary market (MinFin projects CZK270 370bn for the full year), as well as an additional CZK121.8bn on the secondary market. The issuance calendar for October indicates that CZK16.0bn will be sold on the primary market. However, the Ministry of Finance usually increases the amount issued compared to the amount indicated in the calendars, with the year-to-date total amount sold being roughly double the amount indicated. On Monday, the Czech government approved a state budget for 2027 with a deficit of CZK386bn, i.e. CZK3.0bn lower compared to the first draft of MinFin, which we analysed further in our special report: https://bit.ly/Budget_2027_EN. We estimate that this would lead to a widening of the total public finance deficit from 2.8% of GDP this year to 3.5% of GDP in 2027, intensifying the overall expansionary stance of the fiscal policy. Combined with other financing needs, we estimate that total gross CZGB issuance on financial markets will increase by around a quarter yoy in 2027.

Market situation: With the price of Brent crude oil back below 100 USD/bbl, bonds have rallied this week, erasing most of last week’s losses. Last Thursday, the CNB unanimously left rates unchanged, emphasising domestic factors which were, overall, less inflationary than in the last CNB forecast. At the press conference, it was noted that the main objective is now to reduce persistently high core inflation. Less emphasis was placed on factors related to developments in the external environment, such as energy commodity prices, foreign market rates, and monetary policy abroad. You can find out more about the CNB meeting here: https://bit.ly/CNB_Sep26_EN.

Rates outlook: Our baseline scenario still anticipates that the CNB repo rate will remain at its current level for an extended period. However, energy-related risks and a public finance deficit of 3.5% of GDP next year (compared to the CNB’s August forecast of 2.9%) are skewing the risk of the CNB tightening its monetary policy further. In any case, the market pricing of additional four hikes seems excessive.

According to our estimates, Philip Morris ČR will report total revenue of CZK10.7bn for the first half of this year. This is virtually unchanged yoy. We estimate an overall decline in the number of products sold in both the company’s main markets. Net profit will fall by 9% yoy to CZK1.5bn. This equates to CZK532 per share. For the full year 2026, we expect EPS and a dividend of CZK1,080, corresponding to a gross dividend yield of +5.8%.

Announcement date: Wednesday, September 30, 2026  

According to our estimates, Philip Morris ČR will report total revenue of CZK10.7bn for the first half of this year. This is virtually unchanged yoy. We estimate an overall decline in the number of products sold in both the company’s main markets. Net profit will fall by 9% yoy to CZK1.5bn. This equates to CZK532 per share. For the full year 2026, we expect EPS and a dividend of CZK1,080, corresponding to a gross dividend yield of +5.8%.

We anticipate the number of products sold will fall in the first half of the year. This is likely to be the case for the traditional cigarettes category. According to our projections, PMCR’s total revenue for the first half of the year should reach CZK10.7bn. This represents a very slight yoy increase of +0.1%. The gross margin is expected to fall from 43.0% to 42.3% due to cost inflation. We also expect increases in distribution costs (+6.5% yoy per unit) and administrative costs (+7.7% yoy). Operating profit for the first half of 2026 will fall by 7.2% yoy to CZK1.8bn. According to our estimates, net profit will also be lower yoy, reaching CZK1.5bn (-9.0% yoy). On an EPS basis, this corresponds to CZK532.

Dividend: Philip Morris CR typically distributes its entire net profit to shareholders. We consider it to be a dividend stock. We forecast a net profit of CZK3.0bn for this year. This equates to CZK1,080 per share (EPS). We also expect the dividend per share (DPS) to be the same amount. Compared with the current market price, this corresponds to a gross dividend yield of 5.8%.