Observer "Lietuva"

WEEK 16TH

Saturday, 17th of April

Tobacco and alcohol products – only with a passport
From May 1, Lithuanian traders will demand passports or other personal identification documents from the buyers of alcohol and tobacco products. The biggest trade centres passed this decision after the Seimas decided to shift the responsibility for minors buying and consuming these products onto the traders.
Pursuant to the stricter alcohol and tobacco control regulations, trade centres might be deprived of alcohol and tobacco trade licenses for sales of these products to the minors if this violation is registered for the second time.
The Lithuanian Traders’ Association hopes that the new Seimas will modify the sanctions applied against traders for violations of the Alcohol and Tobacco Control Law.
Lietuvos Zinios, Kauno Diena, Respublika, Lietuvos Rytas

Social companies will be supported
State will provide support to companies for the employed destitute people who find it hard to adjust to the labour market. This provision is included in the draft Law of Social Companies that the Seimas enacted on Thursday. Implementation of the law will require some LTL 7 million this year.
Such social companies could employ the disabled people, long-term unemployed, who have been registered in the labour exchange for over two years, former prisoners who have not found employment with the help of the Labour Exchange for six months.
The state would compensate companies’ expenses related to the lack of work skills of such people, their lower productivity or limited working capacity, etc.
Kauno Diena

Most valuable property of brewers – water
Specialists of Utenos Alus brewery claim that the 209-meter depth water bore is nearly the most valuable property of the company because water obtained from such depth contains the qualities that are very suitable for beer production.
Next week, the brewery is to present a new brand of beer, Utenos Auksinis, in the market. When creating and improving the prestigious beer brand, the main focus fell on water.
Ar?nas Lubys, the head of Utenos Alus, claims that beer taste and its qualities are preconditioned by the amount and proportion of minerals present in the water that is used in beer production. According to him, the water obtained from the company’s water bore is special and made it possible to produce a really “golden” beer.
Lietuvos Rytas, Kauno Diena

Friday, 16th of April

Stable economy promises better year
Businessmen forecast that the growth of Lithuania’s economy will slow down this year but salaries will grow; household revenues will increase at a more rapid rate and the financial situation of companies will continue improving. At the same time, it is forecast that loans will grow more expensive, prices of goods and services will increase as well.
These prognoses are presented in the Lithuania’s economy survey carried out by the Lithuanian Free Market Institute.
According to the experts, GDP growth rate will amount to 6.8 percent in Lithuania this year. Last year, the country’s GDP increased by 7.4 percent.
The shadow economy scale in Lithuania remains stable – it accounts for 20 percent of GDP. It is forecast that the shadow economy will shrink by 1 percent this year.
Verslo Zinios, Respublika

Commercial banks post higher profit
Commercial banks operating in Lithuania posted LTL 233.657 million in aggregate net profits for the full 2003, a 59.2 percent increase from the combined earnings of LTL 146.792 million recorded for 2002, the central Bank of Lithuania announced on Thursday.
The aggregate result of Lithuania's commercial banks is the largest since the restoration of independence, the central bank added.
Ten domestic banks and one foreign bank branch operated profitably last year, recording LTL 235.4 million in combined profits. Two foreign bank branches – Poland's Kredyt Bank and Nordea Bank Finland – ended the year with combined losses of LTL 1.7 million.
Vilniaus Bankas, the country's largest commercial bank by assets owned by Swedish SEB, reported the highest profit for the year among the local banks, at LTL 132.276 million. It was followed by Hansabankas, which raised its net earnings by 21.6 percent, year-on-year, to LTL 60.939 million.
Nord/LB Lietuva, controlled by Germany's Nord/LB shot above the line with net earnings of LTL 15.454 million last year.
Lietuvos Zinios

Puzzle for VST owners
The board of the power grid operator Vakaru Skirstomieji Tinklai (Western Distribution Network or VST) proposes shareholders not to ratify the financial accountability report for 2003 and not to distribute profit until the company’s assets are re-assessed and the audit of financial reports is carried out.
Darius Nedzinskas, chairman of VST Board, said provided the shareholders approved of the offer, independent assessors will be hired and they will assess the company’s assets since 2000 anew.
Auditors will have to carry out the audit of financial reports anew, too. This might take from several months to half a year.
According to Nedzinskas, the auditor – PricewaterhouseCoopers – cannot present its opinion about the real financial situation of the company because it is not aware of the company’s assets. Besides, the auditor has expressed doubts regarding certain accounting procedures. As this situation has been lasting for three years, the problem will be presented in the shareholders’ meeting and they will have to decide on further actions.
Lietuvos Rytas, Respublika

Thursday, 15th of April

Carriers are already Europeans
The first European Community permits for the conveyance of goods by international routes, which will replace bilateral permits currently in effect on May 1, have been issued to ten Lithuania's companies.
The first permits entitling to convey goods by routes of the European Union (EU) Member States were awarded at the Ministry of Transportation.
Any Lithuania's carriers that will fail to acquire the Community permits and copies thereof will be banned from the cargo conveyance business in the territory of the EU from the date of Lithuania's accession to the union, i.e., from May 1.
Relying on the data of the Ministry of Transport, an increasing number of permits have been issued lately, which means that Lithuanian carriers undertake international haulage services more actively. Lithuanian carriers transport cargos to 44 countries.
There are 3,720 licensed carriers in the Lithuanian haulage market at present, they own 13,315 cargo vehicles.
Verslo Zinios, Respublika, Lietuvos Rytas

Hansabankas posts profit
Hansabankas, the Lithuanian subsidiary of Hansabank, the largest financial services group in the Baltics, has reported a 34.3 percent increase in its first-quarter net earnings.
Hansabankas announced a consolidated net profit of LTL 25.116 million for the first quarter of this year, up from the LTL 18.695 million net profit in the same period a year ago.
Verslo Zinios, Lietuvos Rytas

Aura wants 10 percent of the market
The distributor of the Estonian beverages Aura hopes to occupy 8-10 percent of the Lithuanian juice market next year and to win the third position in the market. Competitors are sceptical about the plans of the Estonians to boost their market share from 0.2 percent to 10 percent in one year.
AB Ragutis will be distributing Aura juices to trade centres in Lithuania. The owner of the brewery, Olvi, purchased a 100 percent stake in the Estonian AS Osel Foods, which produces Aura juice, six months ago.
Dalius Rutkauskas, trade and marketing director of Ragutis, says they will be trading through the biggest trade centres in the biggest cities. Ragutis will supply Aura juices, vitamin enriched beverages, cold teas and mineral water.
It is hoped to sell 3.6 million litres of Aura juices this year and 5 million litres next year.
Verslo Zinios, Lietuvos Zinios

Quality will predetermine brewers’ fight
The leaders of the Lithuania’s beer market Svyturys-Utenos Alus and Kalnapilio-Tauro Grupe plan to present several new beer brands in the nearest future.
Kaunas-based Ragutis brewery has already presented new Kaiser beer and plans to start importing the Dutch Heineken to Lithuania on May 1.
Brewers have met the new season renewed and offered various campaigns for the consumers. Kalnapilio-Tauro Grupe has renewed design of Kalnapilis beer and presented a new beer brand to the market – Kalnapilis Original. Moreover, the brewery started offering Tauro Pilsneris beer in cans.
Svyturys-Utenos Alus is working on the promotion campaigns at present and promises more changes later on.
Lithuanian producers 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.
Lietuvos Zinios

Wednesday, 14th of April

Competitors will have to provide expensive services
The Lithuanian parliament has passed a new law aimed at liberalizing the country's LTL 200 million postal service market and curbing the market dominance of the state postal operator Lietuvos Pastas (Lithuanian Post).
To ensure the continuous supply of postal services throughout Lithuania, the right to collect, sort and deliver postal items weighing up to 100 grams is reserved for Lietuvos Pastas.
While providing reserved postal services, other postal and courier operators will have to charge at least three times as much as the state operator charges for the delivery of a letter of up to 20 grams (the charge is LTL 1 at present).
Lietuvos Pastas now effectively holds a monopoly on postal items of up to 350 grams. Other operators must charge at least LTL 5 per item while providing reserved postal services.
This threshold should be reduced to 50 grams and 2.5 times the basic rate in 2006.
It is forecast that Lietuvos Pastas may lose part of its market share in cities and major towns and in the business segment to more flexible competitors.
Lietuvos Rytas, Lietuvos Zinios

ERGO will bring its companies under joint management
The German insurance group ERGO plans to bring the insurance companies that it controls in the Baltic countries under joint management.
Saulius Jokubaitis, CEO of ERGO Lietuva and a board member of the company, claims that it is planned to establish a joint board of ERGO group’s insurance companies operating in the Baltic countries, while the companies will not be merged.
According to Jokubaitis, it is hoped that the joint management will boost efficiency of ERGO group’s operation in the Baltic countries.
ERGO group’s companies operating in Lithuania (ERGO Lietuva, ERGO Lietuva Gyvybes Draudimas and Preventa) signed LTL 110.034 million non-life insurance premiums last year, an 8.6 percent rise year-on-year and controlled 18.32 percent of the Lithuanian non-life insurance market.
The life insurance company ERGO Lietuva Gyvybes Draudimas wrote LTL 41.056 million worth life insurance premiums last year and controlled 19.2 percent of the country’s life insurance market.
Verslo Zinios

US investments might be restricted
US investments into certain Lithuania's economic sectors may be subjected to new restrictions upon Lithuania's accession to the European Union (EU) according to the additional protocol between the United States of America and the Republic of Lithuania amending the treaty between the two countries concerning the encouragement and reciprocal protection of investments, ratified by Lithuania's parliament on Tuesday.
The protocol will come into effect on May 1, i.e., on the date of Lithuania's accession to the EU.
Negotiated amendments to bilateral investment treaties prescribe that Lithuania may exert exceptions and apply restrictions for US investors in the sectors of agriculture, audio/video, securities, investment and other financial services, fishery, hydrocarbons, subsidies, air, ground and marine transport.
Verslo Zinios, Kauno Diena

Tuesday, 13th of April

Kauno Pieno Centras group projects LTL 110 million turnover
Kauno Pieno Centras (KPC), one of Lithuania's leading ice cream producers and frozen food product distributors, sees its sales reaching LTL 110 million this year, a 10 percent rise from LTL 100.89 million recorded for the full 2003.
"The rise in sales should be prompted by a range of new products, which have already reached the stores," Gytis Kauzonas, Kauno Pieno Centras CEO, claims.
Investments into new products and equipment made up approximately LTL 1 million, he added.
The European Bank for Reconstruction and Development (EBRD) owns 49.46 percent of Kauno Pieno Centras, which has an authorized capital of LTL 32.1 million.
Verslo Zinios

Cider pulled up leading brewer
Svyturys-Utenos Alus, Lithuania's number-one beer producer in terms of sales, has reported revenues of LTL 48.47 million for the first quarter of 2004, a 2.7 percent increase over the same period a year ago.
Sales of Kiss cider increased 6.2 times over a year. Svyturys-Utenos Alus reports that the main reason of the sales rise is the new plastic bottles of the cider.
Sales of the mineral water Vichy Classique and Montavit have increased by 20.4 percent over a year; sales of kvas soared by 58.6 percent, while sales of other refreshing beverages increased by 25.8 percent.
The group, which is controlled by Baltic Beverages Holding (BBH), increased its first-quarter beer output by 12.3 percent.
Lietuvos Zinios

Sentence to special blanks has been signed
As of May 1, Lithuanian companies will not have to use special VAT invoices anymore. They, just like the rest of economic subjects of other European Union’s (EU) countries, will be able to freely choose the form of this document. The Lithuanian finance minister Dalia Grybauskaite signed a relevant decree on Friday.
Lithuania was the last among 25 present and future EU countries to renounce the special blanks.
Starting May 1, Lithuanian companies will be able to send invoices electronically provided that the electronic version of the document satisfies their partners.
The Finance Ministry claims that this move, which liberalises tax administration, will profit business and will create conditions for reduction of tax administration costs.
Verslo Zinios

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