Petrof spends far more than its pianos bring in

A famous name with a workshop that costs more than it earns

If you have sat at an upright in a Czech music school or heard a grand in a concert hall in Central Europe, there is a fair chance it said PETROF on the fallboard. The company builds acoustic pianos in Hradec Králové, largely by hand, and sells them at home and abroad. It is a limited liability company (spol. s r.o.), and the figures here are its own standalone accounts under Czech accounting standards, in Czech koruna, for the calendar years 2024 and 2025.

In 2025 PETROF took CZK 124m in revenue, down from CZK 163m a year earlier. That is a fall of 24.0%, or CZK 39.1m of sales that did not come back. Operating profit, what is left after paying for wood, wages, energy and the factory but before interest and tax, was a loss of CZK 54.4m. In 2024 the operating loss had been CZK 44.8m.

Put that against sales and it gets stark. The operating margin, the share of each koruna of revenue kept as operating profit, was -43.8% in 2025, after -27.5% the year before. It narrowed by 16.4 pp in a single year. Put plainly, for every koruna a customer paid for a PETROF piano, the company spent well over a koruna to make and sell it.

The comparison with other Czech companies makes the scale clear. Across a benchmark of 6 Czech firms, from an arms maker and the LEGO factory in Kladno to a hotel, a brewery and a translation agency, the median operating margin in 2025 was 4.9%. PETROF sits 48.7 pp below it. Even the Kladno brick factory, which works on thin margins as a production site for its group, kept 3.3%. The brewery in Strakonice kept 0.7%. A mixed group, admittedly, but nobody else in it came close to losing money at this rate.

Why a smaller year hurts a piano maker this much

A piano is a slow product. The soundboard, the frame, the action and the finish take skilled hands and months of work, and those hands are on the payroll whether the order book is full or thin. The factory has to be heated, the wood has to be dried and stored, the voicers and tuners have to be paid. Most of that cost does not shrink when a dealer orders fewer instruments.

So when revenue fell by CZK 39.1m, costs did not follow at the same pace. The operating loss deepened by CZK 9.6m. That is the lever of fixed costs working in reverse: a business built for a certain volume carries the whole cost of that volume even when it sells less.

It is not an accounting artefact of old machinery either. Depreciation, the annual write-down of the factory and equipment, was only CZK 9.1m. Strip it out and EBITDA, operating profit before depreciation and amortisation, was still a loss of CZK 45.2m, against CZK 35.6m in 2024. The EBITDA margin was -36.5%. The cash cost of running the workshop, not the book value of the buildings, is what outruns the sales.

Nor is debt the main villain. Interest expense in 2025 was CZK 1.9m, small next to the operating loss. None of it was earned by the business, of course, since operations lost money, but the hole is in the operations, not in the bank loans.

One line moved less than the rest. The net loss was CZK 44.1m in 2025, almost exactly the CZK 44.2m of 2024, a difference of just CZK 73.0k. Something below the operating line softened the deeper operating loss, but the accounts in this form do not show which item did it. I would not read that stability as a recovery.

The balance sheet tells the other half. Total assets shrank from CZK 465m to CZK 404m. A company that loses money on operations two years running has to fund the gap from somewhere: stock it sells down, cash it spends, assets it lets go, or support from its owners. The accounts do not say which of those carried PETROF through 2025, and that mix would show how long the current pace can last.

A restructuring that has to change the arithmetic

Management says the future rests on a completed restructuring, more efficient production capacity and a focus on creditworthy institutional customers: think schools, conservatories and concert halls rather than one-off private buyers. It also intends to keep growing abroad and in segments where the brand counts for quality. The auditor signed off the 2025 statements without reservations.

That plan reads right for the problem the numbers show. If the workshop is sized for more pianos than the market buys, the cure is either more pianos or a smaller workshop. More efficient capacity is the second route. Institutional customers are a bet on the first: orders that come in larger lots and from buyers who pay. Neither shows up in the 2025 figures yet, which is what you would expect if the restructuring was finished during or after the year.

For people who play, the risk is not that the pianos get worse. It is that a maker with costs this far above its sales has little room to absorb the next quiet year, so the choice of models, dealers and markets may narrow while it gets the numbers back in line.

For anyone running a business with skilled staff and a fixed site, such as a joinery, a bakery or a small manufacturer, the same test applies. Take last year's costs and sort them into what would still be there if sales fell by a quarter and what would go. If most of them would stay, that is the size of your exposure, and PETROF's 2025 shows what it looks like when it arrives.

PETROF still has the name, the craft and a balance sheet that has so far absorbed the losses. What it does not yet have is a workshop sized for the market it sells to. The 2026 accounts will show whether the restructuring closed that gap or only described it.