Observer "Lietuva"
WEEK 10th 2004

Saturday 6th of March

Lithuania passes new compulsory motor insurance law
The Lithuanian parliament has passed a new law on compulsory motor third-party liability insurance, substantially increasing the amount of compulsory insurance cover and abandoning the regulation by the state of mandatory insurance premiums. It will take effect on May 1.
Beginning May 1, the amount of cover under a compulsory motor third-party liability insurance policy is set to rise to EUR 100,000 for damage to property and EUR 500,000 for personal injury.
Under the existing legislation, the amount of cover is LTL 30,000 for personal injury and LTL 30,000 for damage to property. The insurance policy is not valid outside Lithuania.
Under the new law, Lithuanian residents will be able to claim up to EUR 500 euros in non-property damages from insurers as well.
A compulsory insurance policy issued in Lithuania will be valid in all EU member states.
(Lietuvos Zinios)

Barriers for wind power stations in Lithuania
Lithuanian officials clai Color m that wind Color is not favourable enough for Lithuania to start building wind power stations. Representatives of the Ministry of Economy say that the average wind speed in Lithuania is 4-6.5 metres per second, while the speed should reach at least 7 metres per second for the power stations to pay off.
Meanwhile, businessmen are upset with such claims. They say that if someone wants to invest into wind power stations, it means it is a promising field and the wind is good enough.
Businessmen claim that the government fears that it will have to subsidise the power energy produced by wind power stations. Energy providers would have to buy such energy for LTL 0.22 per kilowatt hour, while the price of the energy produced by the Ignalina nuclear power plant costs just LTL 0.06.
Ministry of Economy has already issued 6 permits to erect small wind power stations. Permits for the more powerful wind power stations will be issued in a tender as early as April. Lithuania sees wind energy as a possible substitute for the energy produced by the Iganlina nuclear power plant, which will be closed down before 2009.
(Lietuvos Zinios)

Lithuanian banana importers ask for transition period
Lithuania will have to put a lot of effort in order to keep its right to buy bananas at low prices in Africa. Lithuanian importers might lose such a right from May 1 because under EU regulations companies can buy bananas only from the European Union.
Lithuania is not in the list of importers that have permission to buy bananas directly from the growers. Such status can only be held by countries having companies that have been selling bananas in the European Union for the period of at least three years.
Not a single Lithuanian company is buying bananas directly from the growers, which means they will have to leave the business starting from next year.
Marijus Macevicius, representative of UAB Augma, says that Lithuanian banana importers will meet all EU requirements before the end of 2004 and will import fruits directly from the growers.
(Lietuvos Rytas)

Friday, 5th of March

Brewers already prepare for summer battles
Lithuanian brewers sold 14.41 million litres of beer in February 2004. Beer consumption increased by 4 percent in the country compared to the relevant period a year ago. The beer market increased by 5 percent in February, month-on-month.
Turnover of the market leader Svyturys-Utenos Alus rose by 15 percent in February if compared to January and amounted to 7.19 million litres of beer. In February, the brewer controlled 49.8 percent of the Lithuanian beer market.
Ragutis and Rinkuskiai breweries shared the second and the third positions in the market in terms of sales. Turnovers of Kalnapilis-Tauras group and Gubernija brewery have shrunk.
Kalnapilis-Tauras group, however, has big ambitions to improve its position in the market and projects a huge promotion campaign for its new beer brand Kalnapilis Original.
Svyturys-Utenos Alus does not plan to yield the leader’s position and is to present a new product, Carlsberg beer in cans, in the nearest future.
(Lietuvos Rytas)

Latvijas Balzams consolidates positions in Lithuania already
The joint-stock alcohol producer Latvijas Balzams (LB) has opened representative offices in Lithuania and expanded the range of products exported to Lithuania.
LB decided to increase its presence in Lithuania after it was not permitted to privatize Lithuania's largest distillery Stumbras last fall.
According to LB board chairman Rolands Gulbis, Lithuania is an important export market, and the new offices' key task will be consolidating LB's position on the neighbouring country's liquors market.
The new offices are located in Vilnius, they will be headed by Mareks
Kuklis who has worked as marketing and sales director at the Lithuanian wholesale trade company Mineraliniai Vandenys.
The representative offices will coordinate and promote sales of Latvia-produced alcoholic beverages in Lithuania and offer new products.
(Lietuvos Rytas)

Budget surpasses the plan and the prognoses
Relying on the preliminary data of the Finance Ministry, the state budget plan was exceeded by LTL 11.5 million in February, while the budget revenues for the beginning of this year have surpassed the projected sum by LTL 53.1 million.
It was planned to receive LTL 660.6 million revenues in February. According to the preliminary data, the budget received 1.7 percent bigger revenues, i.e. LTL 672 million.
Two-month budget revenues stand at LTL 1.465 billion.
Dalia Grybauskaite, the finance minister, believes that the gradually filling state budget implies that positive domestic economy tendencies continue.
EU support has been included in the state budget since January 2004. Lithuania has received LTL 16.2 million in EU support over two months of this year.
(Verslo Zinios, Respublika)

Thursday, 4th of March

Lithuania’s largest retailers switch places
RIMI Lithuania, one of the country's major retail chains, has reported sales of LTL 407.4 million for 2003, down by 7.2 percent from sales of LTL 440 million for 2002.
"The decline in sales was in line with our forecasts. The final results were impacted by the consistent implementation of our strategy of shopping centres' reconstruction. Increased sales at the reconstructed shopping centres have proved our strategy to be right," Inga Skisaker, CEO of RIMI Lithuania, said in a statement.
The company said it intended to continue with the reconstruction of its stores in 2004 and to expand its chain in Kaunas, Lithuania's second-biggest city, and the port of Klaipeda in the coming months.
RIMI Lithuania currently owns a chain of 33 stores across the country.
ICA Baltic, which controls the RIMI grocery chain in Lithuania, Latvia and Estonia, posted a 35.8 percent growth in sales to EUR 303 million for 2003.
The announcement of RIMI means that the company lost its position as the third largest Lithuanian retailer to UAB Norfos Mazmena. The latter company made the biggest step forward in 2003 and now aims at the second place in the market, which is currently held by IKI. The leader of the Lithuanian retail market is VP Market, which is also the operator of the largest retail chain in the Baltic countries.
(Verslo Zinios, Lietuvos Rytas)

Lithuania takes the last step towards the introduction of the euro
The Lithuanian government decided on Wednesday to join the European Exchange Rate Mechanism (ERM II), taking a necessary step toward adopting the single European currency.
Lithuania will start the formal process of joining the ERM II now that the government has announced its official position. The board of the central Bank of Lithuania is expected to take an analogous decision on Thursday. Reinoldijus Sarkinas, the central bank governor, has said earlier that Lithuania should join the ERM II sometime around mid-2004 with a view to joining the euro area in late 2006 or early 2007.
Finance minister Dalia Grybauskait_ said the Baltic countries are considered to be the best-prepared to coordinate their financial and monetary policies with the EU policies.
Both the government and the central bank are of the opinion that the current litas-euro rate will be maintained while adopting the euro as the national currency.
(Verslo Zinios, Lietuvos Zinios, Kauno Diena)

Pharmaceutical producer Sanitas doubles its sales
Sanitas, Lithuania's biggest pharmaceutical producer, has reported sales of LTL 6.329 million for the first two months of 2004, up from sales of LTL 3.349 million in the same period a year ago.
Donatas Jazukevicius, CEO of Sanitas, said the company's sales for February surged by 46 percent, year-on-year, to LTL 3.29 million litas.
Sanitas' revenues from direct exports reached LTL 4.967 million in the first two months of 2004, more than double the sales achieved in the same period last year, while its domestic sales soared by 30 percent to LTL 1.361 million.
Sales to Latvia's pharmaceutical company Grindex generated LTL 4.672 million in revenues, more than a three-fold increase over the respective period in 2003.
The company, which is based in Lithuania's second-biggest city of Kaunas, is projecting a net profit of LTL 2.77 million on sales of LTL 36.79 million for the full year 2004 after posting a net profit of LTL 624,600 on sales of LTL 31.147 million for 2003.
(Verslo Zinios)

Wednesday, 3rd of March

Sales of Lithuania’s top retail clothing chain surge by 31 percent
Apranga, Lithuania's top retail clothing chain, has said its total sales for the first two months of 2004, including sales in Latvia, surged by 31 percent, year-on-year, to LTL 18.002 million.
Apranga's sales for February reached LTL 7.184 million, a 22.1 percent increase over the same period a year ago. The chain's sales figures are VAT inclusive.
"The sales growth was due to the chain's expansion in Lithuania and Latvia, coupled with successful seasonal sales," said Saulius Bacauskas, Apranga's CFO.
Apranga currently owns 31 stores in Lithuania and Latvia.
Apranga reported a pretax profit of LTL 6.734 million for 2003, up by 12 percent compared to 2002. Apranga posted consolidated sales of LTL 87.506 million for 2003, a 37.1 percent rise over the previous year.
The group is projecting a pretax profit of LTL 8.5 million for 2004 with total sales in Lithuania and Latvia expected to reach LTL 135 million.
(Verslo Zinios)

Successful franchise of UAB Laimoza
UAB Laimoza plans to expand its fast food network into seaside resort Palanga. The company plans to open a restaurant in seaport town of Klaipeda as well. The first Southern Fried Chicken restaurant under the franchise agreement has been opened in Siauliai in February.
Laimonas Jurgilas, head of UAB Laimoza, says the British company Fast Food Systems Ltd. has offered to buy the second franchise agreement and promised to give the third one free of charge. Jurgilas says that Fast Food Systems Ltd. applies very favourable conditions that allow a small company like UAB Laimoza to start successful business.
The sales of the company over the first month reached LTL 30,000. The restaurant in Siauliai services 200-300 people per day. The main clients of Southern Fried Chicken are students and families.
UAB Laimoza has invested LTL 400,000 into the restaurant and expects investments to return in the next 5 years.
(Verslo Zinios)

Snaige starts the year successfully
Lithuania's Snaige, the leading producer of household refrigerators in the Baltic countries, has reported sales of LTL 39.486 million for the first two months of 2004, a 4.7 percent rise year-on-year.
The company's sales for February went up by 16.6 percent, year-on-year, to LTL 22.262 million, Virginija Graudiniene, CFO of Snaige, said.
Snaige has announced that it is launching its new refrigerator plant in Kaliningrad on March 9. The new facility in Kaliningrad, in which the Lithuanian company has invested over LTL 40 million, will manufacture refrigerators under the Snaige brand name for the Russian and Ukrainian markets. Snaige aims to gain 10-20 percent of the Russian refrigerator market.
Snaige has announced a preliminary pretax profit of LTL 29.158 million for 2003, up by 8.5 percent from a pretax profit of LTL 26.883 million for 2002. Its sales rose by nearly 14 percent to LTL 281.5 million last year.
Snaige aims at pretax profit of LTL 25.4 million on sales of LTL 303.8 million (non-consolidated) for the full year 2004.
(Verslo Zinios)

Tuesday, 2nd of March

Sales of CD manufacturer on the rise
Baltic Optical Disc, the sole Lithuania's producer of compact discs, reported sales of LTL 12.5 million for the full year 2003, a rise of some 32 percent versus the turnover of LTL 9.5 million recorded for 2002. The CD manufacturer targeted sales of LTL 13-16 million for 2003.
Baltic Optical Disc, which ships some 70 percent of its output abroad, manufactured nearly 5 million CDs in 2003, a rise of nearly one-third from the output of 2002.
The company, which maintains close ties with the largest Baltic record companies, aims to produce the major part of records issued in Lithuania, Latvia and Estonia. The company also expects exports to the European Union countries to grow after Lithuania enters the union in May. Baltic Optical Disc expects 25 percent of all exports to go to Western Europe this year.
Baltic Optical Disc sees the expansion gaining pace amid growing portfolio of orders placed by catalogue publishers.
(Verslo Zinios)

Giriu Bizonas continues growing
Wood processing company Giriu Bizonas reported sales of LTL 43.3 million last year, which is an increase of 19 percent compared to 2002. The rising sales were mainly due to the increased export of wood-wool cleats, as well as the launched production of furniture parts. The sales of Giriu Bizonas are expected to increase by a further 52.4 percent this year. The turnover of the company should reach the mark of LTL 66 million.
Nerijus Tilindis, chief executive of Vakaru Medienos Grupe, which controls Giriu Bizonas, says modernization of the company allows producing high-quality products. Giriu Bizonas has recently launched a new cleat production line, which meets the standards of the European Union and is one of the most modern in Lithuania and the Baltic countries.
Giriu Bizonas employs 270 people. It is a member of Vakaru Medienos Grupe (Western Wood Group), which also controls wood processing and furniture producing companies AB Klaipedos Mediena, UAB Sakuona and UAB Baldistra.
(Verslo Zinios)

Lithuanian brewery Kalnapilis has a new chief executive
Connie Astrup-Larsen, who is international director of The Danish Brewery Group, has been appointed as CEO of Kalnapilio-Tauro Grupe, one of Lithuania's biggest breweries.
The Danish Brewery Group, which is the majority shareholder of Kalnapilio-Tauro Grupe, has announced that the supervisory board of the Lithuanian company decided to suspend the CEO of the company, Rolandas Virsilas, on Monday. The decision was made after Virsilas had given his notice of resignation.
Virsilas is seen as a likely candidate to take over from Tomas Kucinskas as CEO of Svyturys-Utenos Alus, Lithuania's number-one beer producer in terms of sales and Kalnapilio-Tauro Grupe's key competitor.
It has been announced that Kucinskas is to be appointed president of BBH Baltics, a new subsidiary of Baltic Beverages Holding (BBH) that is being set up in Vilnius. BBH Baltics will coordinate operations of all three BBH-controlled breweries in the Baltic countries.
Kalnapilio-Tauro Grupe has reported revenues of LTL 102.992 million for 2003, a rise of almost 3 percent over the previous year. However, the company ended the year 2003 in the red.
(Verslo Zinios, Lietuvos Zinios, Lietuvos Rytas)

Monday, 1st of March

Baking methods of Gudobele – a mystery for foreigners
Kaisiadorys-based bakery Gudobele is celebrating its tenth anniversary. The bakery is well-known for its unique baking recipes and excellent quality. Breadstuffs of the company are one of the more expensive in the market but Gudobele still manages to remain among top five Lithuanian bakeries.
Mecyslovas Jusevicius, chief executive of the company, compares the production of his company to Mercedes-Benz among cars. The company bakes bread according to the old Lithuanian recipes without additives, while the natural fermentation process takes three days.
The only shortcoming of the technology is a rather short realization term. However, experts of the company have been working to solve the problem and Gudobele will soon start using a new package, which should prolong the realization term.
Gudobele plans to start exporting its production to Poland soon. Jusevicius thinks the company has good chances to establish itself in the Polish market due to prices similar to the Lithuanian ones and the absence of the traditional Lithuanian dark break in the Polish stores.
(Lietuvos Rytas)

Lithuanian floats EUR 600 million issue of Eurobonds
Lithuania's government floated a EUR 600 million issue of Eurobonds on foreign markets on Friday.
New issue was added to a EUR 400 million issue of 10-year Eurobonds placed in February 2003. The combined issue with a coupon of 4.5 percent will be redeemed in 2013, the Ministry of Finance has announced.
"Strong demand in Lithuania's securities on international markets evidence that [global] investors see Lithuania as a solid and trustworthy partner. Moreover, the success of the issue is an acknowledgement of coherent economic policy, implemented by the government in last three years," said Dalia Grybauskaite, Lithuania's minister of finance.
The demand in Lithuania's Eurobonds exceeded 1 billion euros. German investors purchased 27 percent of new Lithuania's Eurobonds, with Scandinavian investors acquiring 23 percent, Benelux investors - 19 percent, UK and Irish investors - 18 percent, and Swiss investors - 5 percent. Austrian investors bought another 4 percent, Greek - 3 percent, other investors - 1 percent of Lithuania's Eurobonds.
Latest assessments by international rating agencies also contributed to favourable approach to Lithuania among global investors. International rating agency Moody's has assigned A3 rating to Lithuania's long-term foreign currency obligations, with Standard & Poor's affirming the rating at A-, and Fitch at BBB+.
(Respublika, Verslo Zinios)

Robots will be made in Lithuania
Swedish manufacturer of robots KUKA, member of the international IWKA AG concern, is looking for a cheaper labour in Lithuania. Business giant is offering new business opportunities for designers, programmers and machinery manufacturers.
Irmante Alminiene, coordinator at UAB Baltic Business Center Klaip_da, says Lithuania has enough qualified experts and companies working in a similar field that could guarantee a product of high quality for the Swedes. Alminiene says KUKA is looking to start the production of robots used in food, car and metalwork industries in Lithuania. The Swedish company would be ready to invest in Lithuania if a potential partner lacks its own capital.
UAB Baltic Business Centre Klaip_da helps KUKA in the search of partners in Lithuania. The Swedes want to meet the first potential partners at the end of March and start cooperation as soon as possible.
(Verslo Zinios)

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