Prices are rising as frightened, we will have to raise double digits, says the head of Madeta

The owner and CEO of the largest Czech dairy group, Madeta Milan Teplý, describes himself as a seasoned business wolfhound in his seventies. Nevertheless, the current situation, where the prices of everything from raw materials to energy are rising unstoppably, does not leave him alone.

Although the South Bohemian dairy colossus has so far been economically successful – last year its sales and EBITDA grew (5.54 billion crowns, or 511.9 million crowns) and this year the company had an economic result of over one hundred million crowns. expects a downward trend at the end of this year. He said this on Czech Radio Plus’s Speech of Money in an interview with Petr Šimůnek, editor-in-chief of Forbes.

In recent weeks, the number one topic has been the rise in electricity prices. How will it be reflected in the production of Madeta?
Of course, significantly, prices are rising by tens of percent and it is not just about electricity, but also gas. This also closely affects the farmers themselves, whose prices have also risen. And I’m not talking about oil prices. Logically, therefore, they will demand higher prices for milk, and our final prices will thus rise, even if we add only a minimal margin. And the end customer, if his income has not yet fallen, will eventually buy two instead of the usual ten Lipánky. Madeta will definitely feel that.

So do you expect a decline in purchasing power?
Unfortunately yes. So far, people are buying, but in the future they will start to focus on cheaper goods and will also buy smaller volumes.

Is energy the thing that bothers you the most now?
These are not only energy prices, but also service prices, requirements, developments in the EU from the perspective of the Green Deal and the inevitable rise in prices. I’m very nervous about that and I’m instinctively worried about Madeta. Costs are rising sharply, there is not enough packaging on the market and even the things that are are rising dramatically in price. Production is starting to be risky and we already know that at the end of the year we will have to raise prices, which does not make me happy at all.

How much more expensive?
We originally expected a rise in price of two to three percent, but given the development of the situation, we already know that it will have to be a double-digit value.

What do you think happened to such an avalanche?
I look at it with my mouth open. Moreover, what is being prepared in the food industry under the banner of sustainability in the European Union is live suicide. From what I know about it, it is sheer folly, backed by politics. But I don’t want to deal with it, I just want to make food for people.

Is it even possible to combat this when large states decide that energy will simply be produced from air and not from coal?
Of course he will. They have to fight, otherwise we will write off ourselves. Take a look at the very concept of a sustainable level of sustainable production. What exactly is it and does anyone really think about whether it can be produced in this way? It is complete nonsense.

Is this how your competition in the West sees it?
I do not know to what extent it is a question of politics and self-crucifixion, at least in appearance, and to what extent the expected economic development in order to gain some benefits. I dare not judge that. All I know is that what is happening now is complete nonsense. Everyone knows that the electrification of the automotive industry is utter nonsense, from which it is slowly beginning to recede, albeit in silence. It is quite possible that another drive will come, such as hydrogen, but announcing today that diesel engines will end and cause panic is madness.

Should our politicians oppose this?
At the moment, it’s more about who will sit where. I hope they do not make further reckless deficits. I’m too old and seasoned to just tolerate that, after all my efforts to build a business that is stable and working well, someone is standing on my neck and still saying that I should rejoice and be green. All this leads to a reduction in production throughout Europe and we will import the necessary goods from third world countries. There, the situation around ecology is three or four degrees worse than in our country, but the goods will be produced and imported to us.

Inflation can easily lead to wage growth. Are you already solving this situation with you?
I listen to all our plant directors and chief economists. In our country, wages are growing by about eight percent a year, but it is not enough. And there are no employees, so we can’t afford to lose them. We use increasingly sophisticated technology in the company and we need educated people who know what they are doing.

Can the solution be an even more intensive investment in robotics?
Yes, that’s the way, but be careful. Foreign companies that supply these technologies are now also in trouble and often end. Not only chips are missing, but also iron, insulating materials, packaging material… It’s about nerves.

Nevertheless, you have invested a lot in technology in recent years. Where did the biggest money go?
The new cheese factory in Planá nad Lužnicí has ​​swallowed almost a billion. We have started the reconstruction of our Krumlov factory and we are preparing for the reconstruction in Pelhřimov, which will cost five hundred million.

Given the circumstances at the moment, do you expect delays and prices for those planned projects?
Unless absolutely necessary, I want to finish everything according to plan. This whole crazy crisis – and I’m far from just talking about the situation around the covid – must end sometime, and I would like Madeta to be ready to cover the needs of the market at home and, increasingly, in foreign markets when the time comes to regain the market. I am seventy-two, but my goal is to make Madeta a top dairy business in thirty years, and I am close to doing so.

Are you ready for the next wave in Madeta?
We are. We also managed the first wave, the Madetaks are simply a specific species, they were able to work three shifts and cover the needs of the market.

So you don’t need instructions from the government on how to organize covid production?
Don’t let the government overdo it all. People are already able to orient themselves today, they know what to do. Yes, now the situation does not look good again, but I believe that it will not take long and it will decrease.

A new government is being established in the Czech Republic. What should she do for you as one of the leading Czech entrepreneurs?
Set the conditions so that we know what we are up to. I don’t want to advertise to anyone, but our minister (Minister of Agriculture Miroslav Toman, editor’s note) managed the situation around coronavirus and supply. It said what needed to be done, and we did it in our own interest. No talk around.

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