Observer "Lietuva"

WEEK 15TH

Saturday, 10th of April

Profit
Over 60 percent of Lithuanian companies operated profitably in 2003. In certain areas, percentage of profitable companies was even bigger. For instance, 72 percent of companies operated successfully in the post and telecommunications sector; 64 percent – in the trade sector and 63 percent of companies operating in the constructions sector posted profit last year.
However, only 50 percent of companies earned profit last year in the hotel and restaurant sector.
The major profit share (30 percent) fell per industrial companies – LTL 1.3 billion; and 22 percent profit share or LTL 900 million fell per trade companies.
Lietuvos Rytas, Lietuvos Zinios

Lietuvos Avialinijos sold Lietuva
Lietuvos Avialinijos (Lithuanian Airlines, or LAL), the national flag carrier, and Arijus, Kaunas transport and forwarding company have signed an agreement on purchase and sale of 100 percent of Lietuva (Lithuania), the Kaunas-based air carrier.
The transaction would be finalized in 30 days, required for the company to obtain a relevant permit of the Competition Council and settle the payment, Armis Valiulis, Arijus CEO, reported.
Arijus, which bid LTL 2.05 million for Lietuva, has been declared the winner in the tender on divestment of subsidiary of Lithuania's flag carrier.
According to unofficial sources, Lietuva ended the year 2003 with losses of some LTL 150,000-200,000. Neither LAL, nor Lietuva have revealed the final performance figures for 2003 as yet.
Kauno Diena

First move to EU shocked customs officials
Due to different time zones, Lithuania will enter the European Union an hour earlier than Poland, and those 60 minutes have aroused concerns among border guards.
At the time the clock strikes 11 pm in Poland on April 30, Lithuanians will already be celebrating the EU membership as Lithuania is in another time zone.
Drivers going from Lithuania to Poland within that hour, will be able to freely cross the Lithuanian border checkpoint and take with them anything what the EU laws do not prohibit, meantime, they might be still checked on the Polish side by Polish customs officials, who may confiscate forbidden goods.
From May 1, the Lithuanian-Polish border will become internal EU border, there will be no customs check, but document control procedures, which may be slightly changed, will remain.
Vytautas Levickas, the president of the national expeditors’ association Lineka, says drivers going to or from Poland will have to wait for one hour at the border, until both countries become EU members.
Lietuvos Zinios

Friday, 9th of April

Railway moves toward reform
Lithuania's railway infrastructure will be split from passenger and cargo transportation and other railway services.
"Individual railway services should be offered by specific companies to be controlled by Lietuvos Gelezinkeliai," said Algirdas Butkevicius, chairman of parliamentary Budget and Finance Committee.
The state should continue to subsidize the transportation of passengers, whereas the outlook for the conveyance of cargo by rail envisioned the entry of private capital into the business, he added.
Verslo Zinios

Prices of goods and services increased in March
Amid a rise in prices of alcoholic beverages, tobacco, foodstuffs, clothing and footwear, the consumer price index (CPI) in Lithuania grew by 0.5 percent in March, its first increase from the beginning of 2004. Experts forecast a 0.1 percent rise in consumer prices for March.
In January consumer prices stood flat, while in February CPI eased 0.2 percent, the country's Statistics Department has reminded.
The Statistics Department attributed the rise in consumer prices to a growth in prices of foodstuffs and soft drinks (+0.6 percent), alcoholic beverages and tobacco (+1.8 percent), clothing and footwear (+1.3 percent).
Vilniaus Bankas, Lithuania's biggest commercial bank in terms of assets, forecasts a 1.5 percent inflation rate for 2004, while Hansabankas, the second-largest bank, predicts that consumer prices will rise by 2.5 percent this year.
Respublika, Verslo Zinios, Lietuvos Rytas

Heineken is to come to Lithuania
Ragutis brewery, controlled by the Finnish company Olvi, will start importing one of the most popular beer brands in Europe and the world, Heineken, to Lithuania starting May 1.
At present, over 110 breweries in 60 countries produce Heineken beer, thanks to the developed export, the beer is sold in more than 170 countries.
“In the countries, where we do not produce Heineken, we look for reliable, experienced and strong partners for distributing the beer. These were the reasons why we have chosen Ragutis,” the export director of Heineken Art van Gestel said.
According to him, Heineken sees the market of central and eastern Europe as very promising.
Lietuvos Rytas

Thursday, 8th of April

Ukio Bankas plans to open embassy in Kiev
Ukio Bankas, the fifth largest Lithuania's commercial bank by assets, gears up to establish a representative office in Kiev, the first representative office of the bank in a foreign country.
The office would be established in pursue of expansion of bank's operations, Edita Karpaviciene, Ukio Bankas chairwoman, said.
Ukio Bankas announced a net profit of LTL 4.924 million for the full year 2003, a decline of 20 percent from 2002. The assets of the bank soared by 36 percent, year-on-year, to LTL 955 million, its loan portfolio surged by 78 percent, to LTL 267 million, while deposits and letters of credit grew by 10 percent, to reach LTL 523 million at the end of 2003.
Kauno Diena

Persistent Estonians will not leave Lithuanians alone
The Estonian company Eesti Energia demands the Lithuanian government to pay LTL 3.287 million compensation for the suspended privatisation of the power grid company Rytu Skirstomieji Tinklai (Eastern Distribution Network).
This sum represents the factual expenses of Eesti Energia on participation in the privatization process.
In March, Lithuania’s Government suspended the privatization contest, the single participant of which was Eesti Energia.
Most likely, the State Property Fund, which has been obliged to analyse the demands of the Estonian company, will propose the Government not to pay the compensation because the privatization laws foresee that the Government has a right to suspend a privatization tender at any moment without assuming financial obligations.
Eesti Energia has more plans in the Lithuanian energy market. The head of the Estonian company Gunnar Okk has said more than once that if Lithuania decided to build a new nuclear reactor in Ignalina, Estonia and Latvia should participate in the project, too.
Lietuvos Rytas, Verslo Zinios

Ragutis boosted sales by a third in March
Kaunas-based AB Ragutis, producer of beer and other light alcohol drinks, boosted production sales 30 percent in March year-on-year. The company’s sale volume increased 31 percent on March since February.
Ragutis sold over 188,200 dal of beer in March.
Dalius Rutkauskas, trade and marketing director of Ragutis, says the company ranks third in the market in terms of beer sale in March. Over the first quarter of the year, AB Ragutis boosted its market share by 1.09 percent and at present controls more than 10 percent of the market.
The company sold 514,200 dal of beer, cider and alcohol cocktails in the first quarter of this year.
Verslo Zinios, Respublika

Wednesday, 7th of April

Beer export increased
As Svyturys-Utenos Alus, the leader of the Lithuanian beer market, boosted beer export threefold in the first quarter of this year, the general export volume of the Lithuanian brewers increased 42.5 percent.
Relying on the data of the Lithuanian Brewers’ Association, 124,000 dal of beer were exported to foreign countries over the first three months of this year. Svyturys-Utenos Alus exported 97,000 dal of beer over the given period, a threefold rise year-on-year.
Verslo Zinios

Siauliai-based company will manufacture future TV sets
Siauliu Tauro Televizoriai, Lithuania's single TV set manufacturer, will assemble its first sets with 30-inch liquid crystal displays this month. The company estimates that in April about 100 units will be manufactured, and in May, after the start of mass production, about 4000 TV sets will be produced.
"We look forward to starting mass production of the new (liquid crystal) TV sets in May. According to our estimates, annual output this year will be 10,000, but the specific figure will depend on how things go, since we are newcomers to this market," Ramunas Danauskas, the company's chief marketing officer, said.
The Siauliai company will buy all of the components for its new product from the South Korean firm Sevit Co LTD, which will likewise look after sales. Pursuant to a deal concluded between the partners in January 2004, a Sevit representative will oversee the assembly process and other operations in Siauliai.
Siauliu Tauro Televizoriai plans to produce 1.4 million TV sets in 2004, 2.1 times more than it produced the previous year. The company projects net profit of LTL 10 million for the year.
Lietuvos Rytas

New owners improve image of Vilniaus Degtine
An alcohol company Vilniaus Degtine (VD) controlled by the Polish Sobieski Dystrybucja, a subsidiary of the French concern Belvedere SA, plans to boost the production volume by at least 20 percent this year and to increase its share of the strong alcohol drinks market from 16 percent to 20 percent.
In the first quarter of this year, sales of VD production increased by 41 percent, to 90,400 dal, if compared to the relevant period last year.
Darius Zeromskis, CEO of Vilniaus Degtine, says growth of sales has been preconditioned by the changed work of the marketing and logistics departments and new heads of the company.
Another company of the concern, Belvedere Prekyba, which distributes VD production, featured 121 percent growth in the first quarter of the year.
It is planned to invest LTL 2-3 million in Vilniaus Degtine this year.
Verslo Zinios, Lietuvos Rytas

Tuesday, 6th of April

Hansabankas offers safer credit cards
New payment cards of Hansabankas Visa and Mastercard are the first credit payment cards in Lithuania containing exceptionally secure chip technologies therefore the bank obliges to cover the financial losses suffered by the client who loses the payment card during 24 hours until the card is blocked.
Jurate Gumuliauskiene, director of the Private Persons’ Funding Department of Hansabankas, claims that now it is time to offer safer credit cards presenting the user with more possibilities to the market, as the rapidly growing loan market is expected to increase by 60-65 percent, or LTL 400 million, this year.
Relying on the data of Hansabankas, the consumers’ loan market increased by 160 percent or LTL 380 million in Lithuania over 2003, while the household loans increased by 50 percent over the given period.
Verslo Zinios

Constructus posted LTL 3.4 million profit
Constructus, one of the leading Lithuanian construction companies, reported an income of LTL 61.3 million and a net profit of LTL 3.4 million for 2003, according to audited figures.
The construction company said it could not compare last year's operating results with the figures from 2002, since previously the business had belonged to other shareholders who do not want to make the figures public.
This year Constructus projects sales growth of 10 to 15 percent to about LTL 70 million. The company's annual net profit is forecast to be a little lower than in 2003, at LTL 3.1 million.
The construction operator expects to enlarge its current portfolio of orders by LTL 150 million worth of new transactions.
Verslo Zinios

State budget income surpasses prognoses
State budget income amounted to LTL 2.254 billion during three months of this year, or LTL 44 million more than planned, the Finance Ministry reported. According to the preliminary data, LTL 803.6 million revenues were received in March. VZ has previously announced that the state budget received LTL 672 million revenues in February.
“Consistent flow of budget income represents continuing positive tendencies of domestic economy and Lithuania’s EU membership will only strengthen them,” Lithuania’s finance minister Dalia Grybauskaite says. According to her, budget income flow will alter in May and until the budget systems of Lithuania and the European Union are harmonized bigger fluctuations of budget income are possible.
EU support is included in the state budget starting January. In the first quarter of this year, the EU support constituted LTL 76.3 million.
Lietuvos Zinios

Brewers revived in March
The Lithuanian Color beer market increased 10 percent in March 2004. Lithuanian brewers sold 4.634 million dal of beer in the domestic market over three months of this year, a 2.7 percent rise year-on-year. Beer sales of Lithuanian companies shrank by 6.6 percent if compared to 2002.
Nine biggest breweries of Lithuania that belong to the Lithuanian Brewers’ Association, sold 1.82 million dal of beer in March, a 10.3 percent rise year-on-year.
The leader of the Lithuanian beer market, Svyturys-Utenos Alus, controlled by the Scandinavian concern Baltic Beverages Holding, sold 2.19 million dal of beer over three months of the year, a 3.6 percent increase since the relevant period last year.
Kalnapilio-Tauro Grupe, a brewery controlled by the Danish Brewery Group, holds the second position in terms of beer sales. The group’s sales declined 5.6 percent over the first quarter. The brewery presented a new beer Kalnapilis Original in March and managed to boost the sale. In March, Kalnapilio-Tauro Grupe sold 431,000 dal of beer, a 13.1 percent rise if compared to March 2003.
This year, Svyturys-Utenos Alus controlled 47.3 percent of the beer market, Kalnapilio-Tauro Grupe – 22.7 percent, Ragutis – 10.2 percent and Gubernija – 9.9 percent.
Lietuvos Zinios

Monday, 5th of April

State earned LTL 2.89 million from gambling this year
Lithuania's gaming tax revenues soared by 92.7 percent to LTL 2.89 million in the first quarter of 2004, up from LTL 1.5 million collected in the same period a year ago.
Ceslovas Blazys, chairman of the Lithuanian State Gaming Control Commission, reported that the government collected LTL 2.57 million in taxes on gaming machines and game tables and another LTL 317,360 in state levies during the three months.
"We are well on our way to exceeding our annual target of around 10 million litas this year," Blazys said.
As of early April, 12 casinos with 101 tables and 544 Category A (unlimited winnings) machines, 16 slot machine halls with 297 Category B (limited payout) machines, and 93 betting shops were operating in Lithuania.
Verslo Zinios, Respublika

Woodchoppers do not catch up with cabinetmakers who have gathered speed
Lithuanian cabinetmakers are worried about the threatening situation in the wood market, which halts companies’ plans.
Cabinetmakers are feeling the lack of wood-shaving plates. Companies producing the wood-shaving plates do not manage to satisfy the constantly growing demand and accuse woodchoppers of failure to supply the necessary amount of raw material.
At present, wooden plates produced in Lithuania are sold only to the biggest companies manufacturing furniture, which supply their production to the Swedish company Ikea.
Ikea concern is the biggest employer of the Lithuanian cabinetmakers as well as the buyer of their production.
Smaller cabinetmakers are compelled to import wooden plates.
Lietuvos Rytas

Pension reform slows down
The reform of the pension system that started at the end of the last year has slowed down this year. Companies signed a bit more than 20,000 pension accumulation agreements over three months of this year.
However, participants of the pension market do not renounce their prognosis that 350,000 residents will agree to accumulate funds for pensions in the private funds this year. In that case pension companies will have 800,000 clients in Lithuania.
Hansa Investiciju Valdymas (Hansa Investment Management) has registered the biggest number of agreements this year: 13.9 thousand. Hansa Investiciju Valdymas and Lietuvos Draudimas Gyvybes Draudimas (Lithuanian Insurance Life Insurance or LDGD) are controlled by Hansabankas. The project manager of Hansa Investiciju Valdymas Augustas Staniulis says provided that there are no juridical problems, clients of LDGD pension fund will become clients of Hansa Investiciju Valdymas in future.
Lietuvos Rytas

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