Observer "Lietuva"

WEEK 12th

Saturday, 20th of March

Crowd of buyers near the doors of wine company
Alita, the recently privatized Lithuania's sparkling wine producer, has placed the highest bid for a majority stake in Anyksciu Vynas (Anyksciai Wine), the largest Lithuania's wine producer, valuing the 72.93 percent in the winery at some LTL 25 million, unofficial sources have reported. The head of the State Property Fund (SPF) Antanas Malikenas did not comment on the situation.
On March 18, SPF publicly announced that it had received six applications for participation in Alita’s privatization tender however it disclosed neither the names of applicants nor their bids.
The administration and finance director of Alita Vilmantas Peci_ra confirmed that the company had submitted an application to the tender but he did not comment on the price saying that he could not do that due to the confidentiality agreement with SPF.
Presumably, Alita might face problems when it will have to get the permission from the Competition Council to purchase Anyksciu Vynas.
(Lietuvos Rytas, Lietuvos Zinios)

Lithuania and EU standardize norms of duty-free goods import
Starting May 1, Lithuania’s residents will be allowed to transport an unlimited amount of duty free goods for personal needs within the limits of the European Union (EU) countries.
Meanwhile people coming to Lithuania from non-EU countries will be able to import goods not subject to the excise and import VAT taxes for no more than LTL 600 in the personal luggage and the set amount of duty free tobacco, alcohol products, perfume, coffee or tea.
Residents of border zones and international carriers coming to Lithuania from the third countries will be allowed to bring duty free goods for the sum of LTL 300 the most, the Ministry of Finance reported, after submitting a relevant project to the government.
>From May 1, no more than 200 cigarettes, 100 cigarillos, 50 cigars, 1 litre of strong spirits, 2 litres of light alcohol drinks, 500 grams of coffee and 100 grams of tea will be allowed to bring to Lithuania for personal use.
(Kauno Diena, Lietuvos Zinios, Lietuvos Rytas)

Production sales increased by 10 percent
Lithuanian industrial sales grew by 9.6 in February both in month-on-month and year-on-year terms, the country's Statistics Department has reported.
Excluding petroleum product sales, the country's industrial sales recorded a 0.9 percent rise in February versus January. The growth rate was 3.4 percent on a year-on-year basis.
The Statistics Department reported that sales of refined oil products increased by 37.7 percent, chemical industry products – 16.2 percent, machinery and equipment – 12.6 percent, medicine and optics goods – 6.4 percent, food products and beverages – 3.7 percent.
Weaker monthly sales were observed in the sectors of clothing and fur (down 10.5 percent), textiles (9.4 percent), leather and leather products (9.1 percent), electric machines (8.2 percent), plastic products (5.9 percent), and timber (3.7 percent).
(Lietuvos Zinios)

Friday, 19th of March

Number of contenders for Anyksciu Vynas reduces
Applications for the purchase of Anyksciu Vynas (Anyksciai Wine), the largest Lithuania's wine producer, have been submitted by six potential investors, the State Property Fund (SPF) has announced.
Among the applicants for the purchase of Anyksciu Vynas there are the Scandinavian concern BBH, Alita, a recently-privatized sparkling wine producer, as well as a consortium of natural persons, including Kestutis Stabingis, CEO of local wholesaler Eugesta, Jonas Karciauskas, largest shareholder of Vilnius upholstery company Audejas, and Ovidijus Jankauskas, business development manager for Danish Brewery Group, the operator of Lithuania's brewing group Kalnapilis-Tauras.
Meanwhile, Jaunius Ziogas, CEO of Bennet Distributors, which has also been mentioned among potential bidders, confirmed to BNS that the company will not vie for the stake in Anyksciu Vynas.
(Lietuvos Zinios, Verslo Zinios, Respublika)

Card market continues growing
The Lithuanian central bank reports that the number of payment cards increased by 44 percent last year and reached 2.3 million units. According to Visa International, 1.39 million of payment cards issued in Lithuania are various Visa cards. Their number is the highest in Lithuania if compared to other Baltic countries.
Based on calculations of Visa International, turnover in Visa payment cards issued in Lithuania increased by 86 percent and amounted to more than USD 2.1 billion in 2003. The number of Visa cards increased by 40 percent, while the usage percentage soared by 62 percent.
Piotr Szczepaniak, representative of Visa International in Baltic countries, says the abovementioned figures imply that Lithuanians have started using payment cards more often.
According to him, Visa card maintenance and commission fees will reduce after Lithuania enters the European Union.
(Verslo Zinios, Lietuvos Rytas, Respublika)

Telsiai-based company will earn from wind
The first wind power plant has been installed in Anulynas village near Teliai. Capacity of the modern wind power plant is 150 kW. Presumably, it will produce 350 thousand kWh of electricity over a year. The wind power plant is owned by Saulimaras company. Businessmen have invested nearly a million litas in construction of the power plant.
The Ministry of Economy has granted 250 kW quota to the wind power plant. In order to take use this quota, the company will build another wind power plant of 100 kW capacity by autumn. Electricity produced by wind power plants will be sold to Vakaru Skirstomieji Tinklai (Western Distribution Grid). One of the owners of Saulimaras, Marius Poskevicius, says the investment in the ecological power plant will bring dividends in seven years.
(Lietuvos Rytas)

Thursday, 18th of March

Foreign investors turn away from Lithuania
Such giants as BMW and Philips looked at Lithuania however they have found more favourable markets for their investments. Not long ago, a German tire producer Continental exchanged Lithuania to Brazil.
The owners of Nemuno Banga, who plan to build a new PET company near Klaipeda have announced that they will move to Latvia if they continue facing such a pile of problems in Lithuania.
The flows of direct investments that gladden neighbouring countries have catastrophically reduced in Lithuania. Last year, the direct investment figure in the country was the smallest since 1997.
“Even though increasing interest of foreign investors in Lithuania is broadly discussed, we have not received any bigger “green field” investments yet,” the chief analyst of Nord/LB Lietuva Rimantas Rudzkis says.
Among the reasons of small investors’ interest in Lithuania there are objective factors: a lower development level of the country compared to the Western countries, lack of the European railway, inefficiency of the law enforcement system, etc.

Foreigners would buy Akropolis or Europa
As the date of Lithuania’s EU membership approaches, an increasing number of foreign investors show interest in the real estate. They are very interested in the trade centres controlled by VP Market. The owners of VP Market claim that they would agree to discuss only the sale of Akropolis, a trade and entertainment centre in Vilnius.
VP Market is the operator of Minima, Media, Maxima, Hyper Maxima, Maxima Baze and Saulute trade centres. The CEO of VP Market Ignas Staskevicius told VZ that they would not sell their real estate. The stance of SIA VP Market, operating in Latvia, with regard to real estate is similar.
Real estate specialists claim that VP Market wants to have guaranteed trading places until it finds a buyer for the whole retail chain.
According to them, there are two objects attractive for foreign investors in Vilnius at present: Akropolis and the recently opened trade and entertainment centre Europa.
(Verslo Zinios)

Gas supply agreement has been approved
The Lithuanian government approved on Wednesday a deal on long-term natural gas supplies that has been struck between the natural gas utility Lietuvos Dujos (Lithuanian Gas) and Russia's gas giant Gazprom.
The supply agreement, which will be effective from July 2004 to 2015, will enable Lietuvos Dujos to reduce natural gas prices for large domestic consumers. Officials claim that the agreement is favourable to Lithuania.
The government's press office said in a statement that under the agreement, Gazprom commits itself to supplying at least 90 percent of Lithuania's natural gas needs in the period between the second half of 2004 and 2015, of which at least 70 percent should be exported directly to Lietuvos Dujos.
(Lietuvos Zinios, Kauno Diena, Lietuvos Rytas, Respublika)

Wednesday, 17th of March

Flood of low-priced flights has rolled from Western countries to Lithuania
Air carriers in Lithuania have started offering flights at extremely low prices. The Scandinavian company SAS has decided to take passengers from Vilnius to Copenhagen and Stockholm and back by plane for LTL 490 fee. Flights to the Central Europe’s countries cost LTL 590, to southern Europe – LTL 690.
From now on, it is possible to book low-priced tickets four days in advance.
The Latvian air company AirBaltic takes passengers from Riga to Europe’s capitals for LTL 300 price. Last year, the ticket prices of the same flights amounted to LTL 1,000.
Lietuvos Avialinijos (Lithuanian Airlines) plans to announce the prices of the summer season flights this week.
Alma Stanulioniene, director of a tourism agency AAA Wrislit, claims that one of the reasons of lower ticket prices is that SAS and other big air carriers started offering additional and attractive new products. According to her, air companies apply new pricing due to fierce competition caused by low-priced flight companies.
(Lietuvos Rytas)

Smaller brewers discover glass bottles
Smaller breweries start trading in beer in glass bottles and hope to boost their turnover by 10-14 percent. Market participants warn that it is risky to invest in the new equipment and commend UAB Anvila, which has agreed with the partners on promotion of its brand.
UAB Anvila, a brewery that operates in Ukmerge region, sold 412,000 dal of beer last year, a 27 percent rise year-on-year. The company increased its market share from 1.25 percent to 1.7 percent last year and hopes to control 2.31 percent of the market at the end of the year.
Vitalijus Voleika, marketing director of Anvila, claims that in spite of decline of the beer market last year, the company’s sales increased by 7 percent. The brewery has not only increased the number of trading places but has also boosted trade volumes.
In April 2004, Vilkmerge beer produced by Anvila should be available in bottles and, later on, in cans.
TUB Rinkuskiai brewery has been bottling beer for three months already. Rimantas Cygas, head of the brewery, hopes that sales of bottled beer will amount to 10 percent of the general company’s turnover.
Relying on the data of the Lithuanian Brewers’ Association, sales of bottled beer amount to 52-55 percent of the market for three years already.
(Verslo Zinios)

Seimas did not pity pipe smokers
On Tuesday, the Seimas rejected the proposal of the Social Democrat MP Algirdas Kuncinas to apply a threefold lower tariff on smoked tobacco. Kuncinas proposed to set LTL 38/kg tariff on pipe tobacco starting May 1 instead of the planned LTL 111/kg tariff.
The excise of the pipe tobacco amounts to LTL 30/kg at present. According to the parliamentarian, if such a high excise is imposed on pipe tobacco, it will be pushed out of the cigarette market, while traders in pipe tobacco will go bankrupt.
The new Excise Law enacted by the Seimas in late January set higher excises for various tobacco products: the cigarette excise will grow from LTL 42.6 to LTL 47.5, the excise of cigars and cigarillos – from LTL 30 to LTL 38, the excise on pipe tobacco – from LTL 30 to LTL 111.
(Lietuvos Zinios)

Fierce competition in the mobile communications market
Responding to competitors’ actions, Omnitel presented new offers for business clients on Tuesday. Representatives of Omnitel claim that these are the best offers for business clients.
Dainius Pupkevicius, vice-president of Omnitel, admitted that by offering better terms for business clients the company hopes to attract them from the competitors.
Meanwhile Bite GSM claims that the competitor’s tariffs are higher than those offered by Bite and believes that its offers for business are the most favourable in the market at the moment. According to Bite, a client of Omnitel who wishes to make cheaper calls to all the telecommunications networks of the country will have to pay additional LTL 17 per month. Lionginas Sepetys, director of the Business Customers’ Trade and Marketing Department, said this was a long forgotten subscription fee that cannot be used for calls.
Disputes over number relocation do not subside, either. Representatives of Omnitel have declared that the company is ready for installing the service but the competitors hinder it to do so, as they have not prepared for installation of the number relocation system in their network yet.
(Lietuvos Zinios, Verslo Zinios, Lietuvos Rytas)

Tuesday, 16th of March

Brewers aim at wine company
Baltic Beverages Holding (BBH), which is the majority owner of Utenos Alus-Svyturys, Lithuania's number-one beer producer in terms of sales, has expressed its interest in the ongoing privatization of Anyksciu Vynas, the country's biggest wine producer.
Saulius Galadauskas, corporate director of BBH Baltics, a new subsidiary of BBH that is being set up in Vilnius, confirmed to BNS that the group had purchased a set of public tender documents.
Anyksciai mayor Darius Gudelis met with Tomas Kucinskas, BBH vice-president for the Baltic countries, last week.
The minimum selling price for the state's 72.93 percent shareholding in Anyksciu Vynas has been fixed at LTL 8 million. The price has been lowered by LTL 2 million since the first public tender in 2003.
(Lietuvos Rytas, Lietuvos Zinios, Verslo Zinios)

Lithuania’s economy featured the most rapid growth in the Baltic countries
Lithuania’s economy increased at the most rapid pace in the Baltic countries last year, just like in 2002. This became clear after Latvian and Estonian statisticians announced the preliminary economy growth data.
Relying on the data of the Lithuanian Statistics Department, Lithuania’s gross domestic product (GDP) increased by 8.9 percent last year. The Latvian Central Statistics Board announced that the country’s economy increased by 7.5 percent last year, while the Estonian Statistics Department reported that GDP growth amounted to 4.8 percent in 2003.
(Verslo Zinios)

Operational profit of Senukai chain – LTL 57 million
Senukai, Lithuania's largest retailer of building materials and household goods, has reported operational profit of EUR 16.5 million for the period under management of Finnish Rautakesko in 2003.
Rautakesko, a subsidiary of Finland's Kesko Group, purchased 50 percent plus one share in Senuku Prekybos Centras on March 13, 2003. The performance figures of Senukai were incorporated into the results of Kesko group on the same day.
The sales of Senukai trader totalled EUR 171 million from mid-March till December 31, Kesko has announced in its report for 2003.
The Senukai group, which employs a workforce of nearly 2,600, announced a turnover of EUR 196 million for the full year 2003, a rise of nearly 31 percent versus 2002.
The Senukai retail chain, which controls a nearly one-fourth of Lithuania's building and household goods market, comprises 10 shopping centres in Lithuania and a store in Riga.
Moreover, Senukai controls a wholesale trade and logistics network, with approximately 70 stores in Lithuania operating under franchise agreements with the chain.
(Kauno Diena, Lietuvos Rytas, Lietuvos Zinios)

Lithuania will protect insurance market from tariff shock with a transitory period
At the prospect of doubling motor vehicle insurance coverage within the European Union, the Lithuanian Finance Ministry has been making strides to secure a 7-year transition period before the respective directive takes effect in the Baltic state.
The European Parliament's and Council's draft directive governing motor vehicle liability insurance proposes to raise the insurance coverage for damage to human health from the current EUR 500,000 to EUR 1 million.
“The sums certainly will grow but, provided we achieve the transition period, no leap in tariffs will occur," Algimantas Krizinauskas, director of the national Office of Motor Vehicle Holders' Civil Liability, said.
>From May 1, Lithuania is expected to see a surge in insurance sums by dozens of times: the insurance coverage for damage to human health and life will amount to EUR 500,000 and to property EUR 100,000. Presently the respective insurance coverage sums in Lithuania are up to LTL 30,000.
(Kauno Diena, Lietuvos Zinios, Lietuvos Rytas)

Monday, 15th of March

It is proposed to reduce residents’ revenue tax to 24 percent
The opposition party Liberal and Centre Union propose to reduce the residents’ revenue tax from the currently valid 33 percent to 24 percent. The parliamentary vice-chairman Gintaras Steponavicius and the members of the Budget and Finance Committee Kestutis Glaveckas and Raimundas Palaitis have registered the amendment in the Seimas secretariat.
Last week, the Prime Minister Algirdas Brazauskas declared that the Government would propose the Seimas to reduce the residents’ revenue tax from 33 percent to 25-26 percent this year.
Based on the calculations of the Ministry of Finance, if the revenue tax was cut to 26 percent, the state budget would lose some LTL 700 million per year.
(Kauno Diena, Verslo Zinios, Respublika)

Foreign trade deficit increased by 52.7 percent
Lithuania's imports soared 8.2 percent in January versus January 2003, while exports notched up by 1.3 percent in the reporting period, the country's Statistics Department has announced. Lithuania’s foreign trade deficit amounted to LTL 417.6 million, a 52.7 percent rise year-on-year.
Lithuania's exports reached LTL 1.781 billion, while imports totalled LTL 2.199 billion in January 2004.
The major part of Lithuania’s export consisted of mineral products (25.3 percent), textile products (15.4 percent) and machines, mechanic and electric equipment (12.5 percent).
In January, Lithuania’s largest export partners were the European Union (45.5 percent of Lithuania’s export) and future EU member states (16.8 percent).
(Verslo Zinios, Lietuvos Zinios)

GNT Lietuva undertakes new distribution strategy
Lithuanias IT wholesaler UAB GNT Lietuva together with other GNT group’s companies in Latvia, Estonia, Sweden and Finland, has joined the European IT Wholesale Consortium European Wholesale Group.
Laisvunas Butkus, director of GNT group in the Baltic countries, says that using the material basis of the new consortium, the company is implementing a new goods distribution strategy in Europe.
IT wholesalers of other countries, e.g. ALSO (Switzerland), Copaco (Netherlands) and Espinet (Italy) also belong to the consortium.
European IT Wholesale Consortium employs 1,700 people; its revenues amounted to EUR 3 billion last year.
GNT group’s companies operating in Finland, Sweden and the Baltic countries posted EUR 532 million revenues for the last year.
(Verslo Zinios)

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