Observer "Lietuva"
WEEK 1st

Monday, 29th of December

0.2 percent inflation is forecasted for December
Analysts forecast 0.2 percent inflation in Lithuania in December. According to experts, the consumer price index will grow due to increasing food prices; prices of hotel, café and restaurant services will grow as well.
On the other hand, prices will reduce this month due to big discounts, especially in the communications, domestic power appliance and furniture sectors.
Specialists forecasted 0.2 percent inflation in November 2003 but consumer prices increased by 0.5 percent last month.
The consumer prices dropped by 1 percent in 12 months (November 2002 - November 2003) and by 1.3 percent in 11 months of this year.
(Verslo Zinios)

Apranga will be the partner of Spanish Zara chain in the Baltic market
AB Apranga plans to boost its turnover by 40 percent in 2004. The company's development depends on the plans of the Spanish retail trade chain Zara. Several companies have been fighting for the right to become a partner of this company in the Baltic countries but, according to VZ sources, the Spanish company has chosen Apranga.
The Spanish company Inditex that controls Zara brand has confirmed its development program, which includes the Baltic markets.
Zara sells clothes for women, men and children and has stores in 44 world's countries. They are all opened in the most prestigious city places.
(Verslo Zinios)

Owners of Rimi chain do not want to work together with Ahold
Managers of Rimi trade chains are changing the strategic partner. Stein Erik Hagen, a famous Norwegian businessman and a shareholder of ICA, the operator of Rimi, has declared that he is ready to purchase 50 percent of ICA shares from Ahold. This statement causes doubt about the possibilities of the Dutch retail trade giant Ahold to take over the control of the retail trade chain operating in Lithuania. ICA has already agreed with the Finns, Kesko Food, to develop business in the Baltic countries together.
The merged Finnish and Swedish retail trade chains hope to surpass the current market leader in the Baltic countries, VP Market, in several years. Kesko Food and ICA hope to occupy 25 percent of the Baltic food market in three years.
Participants of the Lithuanian retail market, VP Market included, do not fear the possible loss of a market share.
(Verslo Zinios)

Tuesday, 30th of December

Additional EU support for Lithuania
Lithuania's government and the European Commission have signed four financial memorandums over the assignment of additional EUR 39 million to Lithuania in 2004 under the European Union PHARE program.
Some EUR 30 million in PHARE funds will be allocated for the implementation of program on special support for the shutdown of Ignalina nuclear power plant (INPP). The funds will be employed for the financing of future projects on decommissioning of the power station.
A financial memorandum on border cooperation in the Baltic sea region (EUR 3 million), a memorandum on EU support to Lithuania in the nuclear power sector (EUR 2.727 million) and a memorandum on EU support to Lithuania on PHARE exterior border initiative in 2003 (EUR 2.955 million) have been signed.
(Verslo Zinios)

SAS will participate in AL privatisation tender
The Scandinavian air carrier SAS has confirmed that it will participate in a privatisation tender of Aviakompanija Lietuva (Airlines Lithuania or AL), a subsidiary of Lietuvos Avialinijos (Lithuanian Airlines or LAL).
The initial price of AL is LTL 715,000. Previously, LAL Observers' Board approved of the LAL Board's proposal to sell control blocks of shares in the other two subsidiaries, Aero-Chef-LAL and Aviaturas ir Partneriai. Having sold subsidiaries, LAL hopes to gain competitiveness and to become more attractive to potential investors.
SAS is interested in AL because the latter operates in the Baltic region's air transport niche.
In spring, SAS participated in the privatisation tender of the Lithuanian national air carrier but withdrew from the tender afterwards. In September, SAS acquired a 49 percent stake in Estonian Air. The Scandinavian air company also controls 47 percent of shares in the Latvian air company AirBaltic.
(Verslo Zinios)

Rimi will build a hyper market in Kaunas
Rimi Lietuva, the operator of the third largest Lithuanian retail food chain RIMI, has signed an agreement with a real estate company Hanner on construction of a new big trade centre in Kaunas.
Constructions of the new RIMI Hypermarket will start in near future and the trade centre will begin operating in late 2004. Investments in the project will amount to LTL 40 million.
The new trade centre will occupy nearly 12.5 thousand m?, there will be located 25 stores the least. Some 10,000 people are expected to visit the trade centre daily.
According to the director general of Rimi Lietuva Antonio Soares, the new trade centre concept has been created together with the famous French consultation company Market Value. According to him, this project will enable ICA Baltic to reach its goal and to become the leader in terms of the market share, quality and consumers' trust.
It is planned to open three more RIMI Hypermarket trade centres in Lithuania in 2004.
(Lietuvos Zinios)

Wednesday, 31st of December

Reso-Garantia takes over Snoro Garantas
The Russian insurer Reso-Garantia has acquired 100 percent of shares in Snoro Garantas, a Lithuanian non-life insurance company, from the Lithuania's Snoras commercial bank.
The agreement on purchase of shares in Snoro Garantas was signed on December 29. Reso-Garantia has pledged to retain the trademark of Snoro Garantas, use the service network and carry out financial transactions within the above network for the period of ten years.
Reso-Garantia aims to raise the market share of the risk insurer from 2.8 percent to some 10-15 percent in the upcoming three or four years.
(Verslo Zinios)

Lithuanian GDP grew 8.3 percent in the first nine months of 2003
Lithuania's gross domestic product (GDP) grew by 8.3 percent in the first nine months of 2003, compared to the same period last year, according to final estimates of the country's Statistics Department.
The country's GDP totalled LTL 40.088 billion at current prices in the January-through-September period. Earlier the department announced that, according to preliminary figures, Lithuania's economy expanded by 8.1 percent in the first nine months of 2003.
Lithuania's GDP expanded by 8.8 percent in the third quarter, year-on-year, to reach LTL 14.365 billion. The country's GDP per capita stood at LTL 4,150 in the third quarter, a 9.1 percent rise in year-on-year terms. In the nine-month period, GDP per capita was LTL 11,600, an increase of 8.5 percent from the January-to-September period of 2002.
(Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios)

Partners help Roze to establish itself in Europe
Vilnius-based UAB Roze managed to double its annual turnover after receiving an order for the women's Hugo Boss line. The garment company is now providing sewing services only for world famous companies. Such strategy increases the turnover and helps UAB Roze to establish its Roze brand in the European market.
Nadezda Filipova, head of UAB Roze, says the turnover of the company is expected to be LTL 11 million this year, up from LTL 7 million last year. Filipova says orders from Hugo Boss had the biggest influence on the turnover of the company. She adds that sewing for Hugo Boss requires extreme care, as everything must be of the highest quality. Roze is also providing sewing services for the French companies Chacharel and Gerard Darel.
Roze sells clothes under its own brand in France, part of the collection is purchased by the Scandinavian companies too. The clothes of Roze are designed by the well-known designers Ieva Seviakovaite and Jolanta Talaikyte.
(Verslo Zinios)

Wednesday, 31st of December

Cigarette and fuel prices go up in Lithuania
Retail fuel prices notched up in Lithuania, with a rise of excise duties coming into effect from January 1, 2004.
Retail prices of diesel fuel climbed by nearly 16 cents, while prices of gasoline edged up by 6 cents.
Pursuant to the amendments to the Law on Excise Duties, the excise levied on engine fuel should rise from LTL 1,250 to LTL 1,318 per ton from the beginning of 2004. The excise duty on kerosene should grow from LTL 720 to LTL 1,002 per ton, and gas-oil - from LTL 860 to LTL 1,002 per ton.
The cigarette excise will be gradually increased until 2009 as well. A cigarette pack that costs some LTL 2 now will cost LTL 4.4 in 2009. A pack of cigarettes that costs LTL 5 will cost some LTL 7.75 in 2009.
(Lietuvos Zinios, Respublika, Lietuvos Rytas)

Industry leaders set priorities
Achema Group, which controls over 40 companies in Lithuania, plans to focus its activities on production of nitrogen fertilizers, as well as projects of energy and management.
The main company of the group is Jonava-based factory of nitrogen fertilizers. The factory was renovated in 2003, thus the production levels in 2003 will be increased. The focus markets of Achema are in France, United Kingdom, Germany, Scandinavian countries and Belgium. The turnover of Achema in 2003 is expected to reach LTL 567 million, which would be an increase of 20 percent compared to 2002.
This year, Achema group plans investments into the Lithuanian energy sector. It will invest into the construction of 3 wind power stations near the Baltic Sea. The total amount of investments into the energy sector should reach LTL 40 million.
(Lietuvos Zinios)

Production of Kiss cider moved to Lithuania
Svyturys-Utenos Alus brewery, the leader of Lithuania's beer market, has launched production of cider Kiss amid fast growth of domestic cider market. Previously this brand of cider was imported from Estonia.
New cider production line made by the Swedish company Alfa Laval, which ate up over LTL 1 million in investments, has been installed at the brewery in Utena, Northern Lithuania.
Apple and pear flavor cider Kiss will be poured into 1.5 litre PET bottles, and the capacities of the new line have been put at 80,000 bottles per day.
Analysts expect new plastic bottling to increase the sales of Kiss significantly as plastic bottles account for some two thirds of cider sales in Lithuania.
The brewery ruled to launch production of Kiss in Lithuania with regard to fast growth of domestic cider market. In 2003, compared with 2002, Lithuania's cider market surged by 68 percent, from 1.37 million litres to 2.3 million litres, Svyturys-Utenos Alus has reported.
(Lietuvos Rytas)

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