Issuance activity: Tomorrow, MinFin is scheduled to auction CZK5.0bn of 2035 bonds and CZK1.0bn of 2038 bonds. 

Issuance activity: Tomorrow, MinFin is scheduled to auction CZK5.0bn of 2035 bonds and CZK1.0bn of 2038 bonds. We believe the issuance pace is unlikely to slow in the rest of 2025 and may pick up further in 2026. Polls indicate a high likelihood that the opposition will win the Czech Republic’s parliamentary election, scheduled for 3-4 October. A revision of the Czech Republic’s current restrictive fiscal rules seems likely after/if they take power. This may put downward pressure on the Czech ratings/outlook, as both Moody’s and Fitch expected fiscal policy to remain prudent or consolidate further in their latest reviews. More in our report here.

Market situation: The Czech rates have been better paid, especially compared to USD rates, but even looking at EUR rates the Czech curve is now at an elevated level. In our view, relentlessly hawkish CNB commentary is the primary driver, but some recent pro-inflationary data and pay flows also contributed to the move. Unlike in other episodes of rising rates, however, ASW levels remained relatively wide and the bond offer has improved. This may reflect anxiety ahead of the general election. In terms of Czech data, the PPI stagnated in August and declined by -0.8% in yoy terms. Overall, we expect subdued PPI development to continue. This should mean that increased growth in service prices will continue to be offset by goods prices within the (core) CPI.

Rates outlook: We expect headline inflation to gradually return close to the central bank’s 2% target in 2H25 and remain there in 2026. This positive outlook amid expected economic slowdown due to tariffs, as well as the impact of restrictive monetary conditions, are likely to lead to further CNB rate cuts to the 3% terminal rate. This level could, however, be reached only in 1H26. See our forecast in the Czech Economic Outlook: https://bit.ly/CEO_3Q25_EN.

Colt CZ's results for the second quarter of this year will be weaker yoy. The consolidation of ammunition manufacturer Sellier&Bellot, which began in mid-May 2024, will help offset the weaker performance of the firearms sector. The commercial segment in the U.S. has not yet recovered, and we do not anticipate delivering to the Czech Army in 2Q25. We estimate a yoy decline in total revenues of 7.5% to CZK5.6bn for 2Q25. According to our estimates, EBITDA of CZK1.2bn is weaker by 21.0% yoy. Colt will not meet its quarterly projections. Nevertheless, we expect Colt to confirm its full-year guidance.

Announcement date: Thursday, September 18, 2025, before the market

Colt CZ's results for the second quarter of this year will be weaker yoy. The consolidation of ammunition manufacturer Sellier&Bellot, which began in mid-May 2024, will help offset the weaker performance of the firearms sector. The commercial segment in the U.S. has not yet recovered, and we do not anticipate delivering to the Czech Army in 2Q25. We estimate a yoy decline in total revenues of 7.5% to CZK5.6bn for 2Q25. According to our estimates, EBITDA of CZK1.2bn is weaker by 21.0% yoy. Colt will not meet its quarterly projections. Nevertheless, we expect Colt to confirm its full-year guidance.  

The contribution from S&B, which has been part of Colt since mid-May of last year and therefore did not affect the entire second quarter of last year, will be positive in the second quarter of this year. S&B should be the driver of the results and should at least partially compensate for the firearms segment. The latter should see weaker performance in the US civilian sector, which fell by 3.1% yoy in 2Q25. There will also be a decline in the Czech Republic due to the absence of deliveries to the Czech Army. Some deliveries have likely been postponed to subsequent quarters. According to our estimates, Colt will report total 2Q25 sales of CZK5.6bn, a 7.5% yoy decline. EBITDA is expected to reach CZK1.2bn, reflecting a yoy decline of 21.0%. However, the margin should increase by +3.6pps to 20.9%. This increase is due to the consolidation of S&B and the higher margins in this sector. According to our estimates, net profit for 2Q25 will be CZK513m, a 21.8% yoy decline.

Guidance: We expect Colt's management to reiterate its FY targets of CZK 25 billion (+/- 10%) in revenue and CZK 5.5 billion (+/- 10%) in EBITDA. This is despite the fact that the pace of fulfillment appears to be slightly weaker and is heading towards the lower end of the projections. Our estimated revenues for 1H25 are 44.3% of Colt's full-year goal and 43.5% for EBITDA.

When we compare Colt's quarterly projections, it's clear that 2Q25 will likely miss its targets. The reasons are described above. According to the projection, Colt should report revenues of CZK6.0bn and EBITDA of CZK1.3bn for 2Q25. However, our estimates are CZK5.6bn in revenue and CZK1.2bn in EBITDA, which are below the current targets.