Observer "Lietuva"
WEEK 11th

Saturday, 13th of March

Rising economy will induce growth of the insurance market
Significant rise of Lithuania’s economy this year might precondition growth of the life and non-life insurance market. Increase of premiums of the obligatory motor vehicle owner’s liability insurance after Lithuania enters the European Union will affect growth of the non-life insurance market as well.
Vaidotas Krencius, an actuary of Lietuvos Draudimas (Lithuanian Insurance), claims that in spite of the constant growth of the insurance market, insurance premiums in Lithuania account only for 1.5 percent of the gross domestic product of the country. Since this figure is much smaller than the relevant figures in EU and Central European countries, the Lithuanian insurance market has got a big potential of growth.
It is forecasted that the number of insurance companies will continue reducing in Lithuania due to consolidation. These processes should affect non-life insurance companies the most.
The life insurance scale increased by 54 percent in Lithuania last year if compared to 2002. The scale of non-life insurance market did not change much since 2002.

Million worth orders are expected from NATO
Lithuanian businesses see the country's accession to NATO both as a powerful instrument for boosting sovereign security, and as a gateway for millions worth orders for domestic industry.
Membership in NATO might bring about lucrative orders to any Lithuania's companies, irrespective of their size, believes Vaclovas Sleinota, vice-president of the Lithuanian Confederation of Industrialists and CEO of Vilniaus Vingis, the leading electronics producer.
Defence industry, which demands highly skilled products, offers high-skilled work, large wages and stable orders, notes Margarita Starkeviciute, a well-known financial expert.
Presumably, Lithuania’s contribution to NATO budget will amount to LTL 4.5 million this year and to LTL 8 million in two years.
(Kauno Diena)

Big profit – after selling company
The Lietuvos Draudimas (Lithuanian Insurance) group, the largest Lithuania's insurer, earned LTL 54.7 million in net profit in 2003.
The group recorded a windfall profit of LTL 44.4 million on divestment of 100 percent in life insurance arm Lietuvos Draudimo Gyvybes Draudimas (Lithuanian Insurance's Life Insurance) and sale of 2 percent in credit insurance subsidiary Lietuvos Draudimo Kreditu Draudimas (Lithuanian Insurance's Credit Insurance).
In 2002 the earnings of the group totalled LTL 6.7 million.
The spectacular rise of profit was also predetermined by higher return on investments, Stasys Jakeliunas, the finance director of Lietuvos Draudimas, noted at Friday's news conference, adding that the operational profit was weighed down by LTL 6.7 million by real estate reappraisal.
(Lietuvos Rytas)

Friday, 12th of March

Vereins-und Westbank will expand the chain in Lithuania
The Vilnius branch of Germany's Vereins-und Westbank (VuW), owned by the Bayerische Hypo- und Vereinsbank (HVB) group, aims to raise net earnings 2.9-fold, to LTL 3.45 million this year, from LTL 1.2 million in 2003.
Wilfried Seemann, Vereins-und Westbank Vilnius branch CEO, reported at a news conference that the bank’s assets increased by 101 percent, the loan portfolio – by 105 percent and deposits – by 57 percent last year.
The branch of Vereins-und Westbank entered Lithuania's banking sector in February 2001. In May 2003 the branch opened a unit in the seaport of Klaipeda.
VuW would like to open branches in Kaunas, Panevezys, Siauliai, Alytus and Marijampole, too, however these plans will be offered to the central headquarters only after VuW reorganization. The biggest shareholder of the bank, HVB, wishes to merge with VuW and liquidate some departments of VuW.
The merger will not affect the activities of the Vilnius branch of Vereins-und Westbank.
(Verslo Zinios)

Sodra rejoices at surplus
The Lithuanian state-run social insurance fund, Sodra, has released preliminary data showing a budget deficit of LTL 8.5 million for February, some 58.1 percent below the projected level of LTL 11.8 million.
Social insurance tax revenues totalled LTL 399.1 million last month, exceeding the estimate by LTL 9.1 million.
"Neither February nor January reflect trends for the whole year. However, a year-on-year comparison of February's revenue collection data reveals upward trends, which gives ground to believe that Sodra's plans for this year are achievable," Mindaugas Mikaila, Sodra's director, said in a statement.
(Lietuvos Zinios, Respublika)

Lithuania has guaranteed long-term gas supply
Lietuvos Dujos, Lithuania's natural gas utility and Russia's gas giant Gazprom have closed talks on the agreement over long-term supply of natural gas, initialling the document, which is expected to come into effect from the second half of 2004.
The contract, which is expected to be approved by Lithuania's government in a week, will expire in 2015, the State Property Fund (SPF) has announced.
According to new gas supply agreement, Gazprom will offer to Lietuvos Dujos the direct supply of 70 percent of gas demand on Lithuania's market (excluding the Achema fertilizer producer and Kaunas CHP), raising the share of gas utility on domestic market to 70 percent from some 28 percent.
The deal could be closed in late March, Liutauras Radzevicius, SPF transactions department head, believes that the deal could be closed in late March.
(Lietuvos Zinios, Verslo Zinios)

Wednesday, 10th of March

Gas stations of Mazeikiu Nafta, Uotas and Ventus Nafta will be merged into one chain
Lithuania's oil company Mazeikiu Nafta (Mazeikiai Oil or MN), which is majority owned and operated by Russia's oil giant YUKOS, has unveiled plans to merge its filling stations and those run by the oil product retailers Uotas and Ventus-Nafta into a chain operating under a single name.
A decision on the name for the chain of 29 filling stations will be made in about a month's time, Vladislavas Paulius, vice-president of YUKOS Refining & Marketing and a member of Mazeikiu Nafta's management board, told Lithuanian journalists in Moscow on Tuesday.
YUKOS is also considering setting up a chain of filling stations in Latvia and Estonia, where the Russian group currently has no petrol stations. The Lithuanian refinery's products are marketed in the two Baltic countries by Mazeikiu Nafta Trading House.
MN has had a very successful start in 2004 and expects to achieve substantial profit growth this year. The oil refinery announced a net profit of LTL 230.249 million for 2003, versus a loss of LTL 114.3 million for 2002, under the US Generally Accepted Accounting Principles (GAAP).
(Respublika, Verslo Zinios)

New plant of Snaige has been opened
Lithuania's Snaige, the biggest refrigerator manufacturer in the Baltic countries, launched its new refrigerator plant in Kaliningrad, in Russia, on Tuesday, expecting to generate USD 30 million to USD 40 million in revenues by the end of this year.
The new plant is expected to sell around 1,000 refrigerators to the Russian market in March, with its full-year sales projected to reach around 150,000 units in 2004, Romualdas Raudonis, CEO of Snaige, said in a news conference.
He said the company has invested around LTL 47 million in the new facility with an annual production capacity of 350,000 refrigerators.
According to Raudonis, all the production of the new plant will be sold in the Russian market and the surplus will be exported to Ukraine. The company hopes to occupy 10-20 percent of the Russian refrigerator market.
(Lietuvos Zinios, Verslo Zinios, Respublika, Lietuvos Rytas)

First signs of concern about Lithuanian economy
Experts are concerned about a record slump in investments in the Lithuanian economy last year and decline of workforce reserves. Analysts of Nord/LB Lietuva bank presented the first Lithuanian Economy Review drafted by the bank, which expresses concern about the lack of green field investments in Lithuania. The amount of direct foreign investments in the country in 2003 was record low over the last six month and stood at LTL 765 million.
The chief analyst of Nord/LB Lietuva Rimantas Rudzkis, said Lithuania’s attractiveness was overshadowed by many old problems, e.g. Lithuania’s system of education and professional training does not meet the rapidly changing business needs, there are lots of bureaucratic hindrances to business, high corruption level and faulty law enforcement system.
According to Nord/LB analysts, the situation in the labour market will continue improving but additional problems might rise in the future, as labour exchanges are unable to meet business demands.
Nord/LB Lietuva sees Lithuania's economy expanding by 7.5 percent in 2004, with the growth slowing down to 6.7 percent in 2005.
(Lietuvos Zinios, Kauno Diena, Verslo Zinios)

Tuesday, 9th of March

Lithuanian government received EUR 600 million on bond issue
Lithuania's government has already shovelled up the receipts on a new EUR 600 million issue of Eurobonds - the largest ever issue by the Cabinet, placed on foreign markets on February 27. However, financial analysts seem to disagree over the potential impact of the issue on domestic financial market.
The funds, which were transferred to the public treasury account at the Bank of Lithuania, would be employed for the redemption of EUR 250 million bond issue in late March, as well as for the coverage of budget deficit, the Ministry of Finance has told BNS.
However, Margarita Starkeviciute, a well known financial analyst, criticised Lithuania's government, which borrowed nearly LTL 2.6 billion, including LTL 500 million taken from the Stabilization Fund, in the first two months of 2004.
Such vast sums of money might be employed inefficiently, she warned.

Possibility of choice will change business environment
As the Seimas has enacted the amendments to the Pension Accumulation Law initiated by the Ministry of Social Care and Labour, managers of private pension funds will not be able to announce precise data about their positions in the market or a precise number of the agreements concluded over a given period of time.
The amendments define two cases when people can cancel their pension accumulation agreements during 30 working days.
Representatives of the investment management companies said such amendments introduce a possibility of speculations.
A secretary of the Ministry of Social Care and Labour Audrone Morkuniene claims that the right of choice is much more important than the changing business environment of investment management companies.

No price leap is promised, while prices of goods are shrinking
Lithuanian consumer prices edged down by 0.2 percent in February, compared with January, after holding steady for two consecutive months, the country's Statistics Department has reported
Over the year from February 2003 to February 2004, consumer prices in Lithuania fell by 1.3 percent. In February 2004 versus December 2003, the CPI fell by 0.3 percent.
The Statistics Department said February's CPI was pushed down by a 1.8 percent drop in clothing prices and 3.7 percent drop in footwear prices due to discounts, as well as a 0.8 percent decline in prices for alcohol and tobacco goods and a 0.2 percent decline in prices for foodstuffs and non-alcoholic drinks.
Vilniaus Bankas forecasts a 1.5 percent inflation rate for 2004, while Hansabankas predicts that consumer prices will rise by 2.5 percent this year.
(Lietuvos Zinios, Verslo Zinios, Kauno Diena)

Monday, 8th of March

Assets and loans of Lithuanian banks increased in January, while deposits shrank
Assets of ten Lithuanian commercial banks and two foreign bank agencies in Lithuania amounted to LTL 21.58 billion at the end of January, a 1 percent rise month-on-month.
Relying on the data of the central bank, the loan portfolio of the banks increased by 3.1 percent in January and amounted to LTL 12.035 billion. The amount of special provisions increased by 2 percent, to LTL 124.1 million.
In terms of the loan portfolio, SEB-controlled Vilniaus Bankas occupied the leading position having issued LTL 4.609 billion in loans. Hansabankas, a member of Hansabank financial group, ranked second with LTL 2.555 billion worth loans.
Meanwhile the sum of deposits kept in the banks reduced by 1.8 percent over a month, to LTL 13.152 billion.

Lithuanian amber gains popularity abroad
Various sorts of amber ware were sold for the sum of LTL 1.5 million in the amber processors’ exhibition Amber Trip organised in Vilnius recently.
Amber jewellery produced by Lithuanians is very popular in the Western Europe and the United States. Lately, big amounts of amber have been sold to the Japanese.
Paulius Zabielskas, head of Vilnele company, says the Japanese believe that amber is not only a decoration but it also is good for health.
Amber processors claim that amber is coming back to fashion. Germany is one of the countries interested in the Lithuanian amber the most. New markets have been discovered lately, too. At present amber is in demand in Greece, United Arab Emirates and Japan.
Some 130 tons of amber and amber ware worth LTL 10 million have been exported annually over the last five years.
(Lietuvos Rytas)

Farmers will receive LTL 47 million for milk
LTL 47.6 million direct subsidies will be paid to the milk producers who sell milk for procession this year.
Following the procedure ratified by the minister of agriculture, milk processors who sold milk for procession and who have cows marked according to the regulations will receive the subsidies this year.
Edita Bagdoniene, chief specialist of the National Payment Agency, said the payment of direct subsidies to milk processors has already started and LTL 11.7 million have been paid by now.
At first, the subsidies were remitted to the municipalities that were the first to submit documents to the National Payment Agency.
(Verslo Zinios)

E-commerce incubator is to be established in Lithuania
Director general of Penki Kontinentai companies’ group Idrakas Dadasovas, director of the International Knowledge Economy and Knowledge Management Centre under Vilnius University prof. Renaldas Gudauskas, deputy CEO of the Lithuanian Industrialists’ Confederation Andrius Nikitinas and the vice-president of the Information Science Students’ Organization Vytautas Pranckevicius signed a letter of intent on establishment of the e-commerce incubator.
The goal of the project is to start implementing innovative e-commerce ideas, to enable their authors to start their own business, to provide free of charge consultations on the e-commerce issues, to promote e-commerce in Lithuania as well as creation and application of new software and hardware solutions.
(Lietuvos Zinios)

Previous weeks:
Back to
Baltic Weekly MonitorA

 TERMS & CONDITIONS / KÄYTTÖOIKEUDET. © Oy Compiler Ab. All rights reserved.