Observer "Lietuva"

WEEK 17th

Saturday, 24th of April

Estonians will retrieve money only in court
Estonian energy company Eesti Energia will have to address the court in order to get compensation of losses incurred due to participation in the tender of privatisation of Rytu Skirstomieji Tinklai (Eastern Distribution Network or RST). According to the sources of Lietuvos Rytas, the offers concerning payment of compensation drafted by the Lithuanian ministries of economy and finance are unfavourable to the Estonian company. Both ministries believe that Eesti Energija should not be paid anything. The State Property Fund has a similar stance but it warns that if Eesti Energia addresses the court, the court’s decision might be beneficial for the foreign company.
Eesti Energia was a single participant of RST privatisation contest that met all the qualification requirements set by the government. However, the Lithuanian government decided not to sell the power distribution grid to the Estonians.
Lietuvos Rytas

Kaunas TIC opened the season
Kaunas Region Tourism Information Centre (TIC) announced the season’s opening on Friday, April 23. The director of the centre Sigitas Sidaravicius remarked that this year, the season has started earlier than expected.
Sidaravicius reported that 27,500 tourists visited TIC of Kaunas region last year. The number of tourists in the summer season of the last year increased by 86 percent if compared to the relevant period a year ago. It is projected that TIC of Kaunas region will receive 10 percent more visitors than the last year.
TIC of Kaunas region was visited mostly by tourists from Germany (1,335), Poland (768), Finland (616), Czechia (612) and USA (346). The number of tourists coming to Lithuania from Finland, Poland and Czechia has increased by 97 percent, 117 percent and 124 percent respectively over a year.
Kauno Diena

Profits of companies feed the state
Lietuvos Telekomas was the biggest profit tax payer in Lithuania last year: it paid LTL 43.485 million tax, the survey of the national budget revenue collection of the State Tax Inspectorate reveals.
Darius Dziaugys, the leading investor relation specialist of Lietuvos Telekomas, said such a big sum of the profit tax formed because the company had taken advantage of the Juridical Entities’ Profit Tax Law, which enables big investors to postpone payment of the profit tax.
The second biggest tax payer in Lithuania is the railway company Lietuvos Gelezinkeliai (Lithuanian Railways), which paid LTL 42.13 million tax. A private company Omnitel ranks the third having paid LTL 23.3 million profit tax.
On the whole, LTL 785 million in profit taxes were collected last year, a 2.97 times rise year-on-year.
The Statistics Department reported that the profitability of the Lithuanian economy increased 1.1 percentage point in 2003, and stood at 4.9 percent. (Lietuvos Zinios)
Lietuvos Zinios

Friday, 23rd of April

Banks calculate profit
Commercial banks operating in Lithuania posted LTL 57.1 million general profit in the first quarter of this year, a 3.5 percent decline year-on-year.
The pre-tax profit of the banks for the given period was 4.7 percent bigger than during the same period last year.
According to the data of the central bank, nine banks and two branches of foreign banks operated profitably in Lithuania this year. They posted LTL 58.416 million profit. Sampo bank and Vilnius branch of the Polish Kredyt Bank S.A. suffered LTL 1.352 million loss.
Vilniaus Bankas and Hansabankas earned the biggest profits in the first quarter of this year: LTL 25.7 million and LTL 20.2 million respectively.
The central bank of Lithuania reports that two factors have positively affected the profitability of the banks this year: 16.6 percent higher income from net interest rates and 12.1 percent higher net income from services and commission fees.
Verslo Zinios, Respublika

Shares of TV channel have been sold
MG Baltic Investment, a subsidiary of Lithuania's multi-business group MG Baltic, has sold 15 percent of shares in Lithuanian commercial television LNK to the investment fund Amber Trust.
"We are implementing a long-term strategy via this transaction which provides for creating possibilities to investors to invest in perspective companies of our group," Raimondas Kurlianskis, vice-president of MG Baltic said.
Amber Trust S.C.A. is based in Luxembourg, it is an investment fund with the EUR 50 million capital controlled by two investors: the Finnish Danske Capital Finland Ltd and US-company Firebird Baltic Advisors LLC.
Amber Trust S.C.A. has invested in the following Lithuanian companies: Utenos Trikotazas (Utena Knitwear), Snaig_ and Vilniaus Vingis.
The CEO of LNK Paulius Egidijus Kovas said they positively valued the coming of a new investor.
Lietuvos Rytas, Verslo Zinios

7 times more Svyturys beer to be exported to USA
Svyturys-Utenos Alus brewery exported 230,000 litres of beer to the United States over four months of this year, which accounts for a third of the general company’s beer export to USA over the year 2003. Due to the rapidly growing demand, heads of the brewery plan to boost export to the United States 7 times next year.
Imantas Cepulis, head of Svyturys brewery, claims that Svyturys beer consolidated positions in the stores of several US states already and its sales geography is expanding. He attributes the success of the Lithuanian beer to the good work of the brewery’s partners in America, B&I Overseas Trading. The new partner of Svyturys had a task to step over the traditional markets of Lithuanian products – local Lithuanian communities.
It is planned to broadcast Svyturys commercial via one of the US satellite television chains, programs of which are seen in USA and Canada.
Last year, Svyturys-Utenos Alus became the leader of Lithuanian export: it started exporting beer to Canada, Kaliningrad and boosted export to the USA, Great Britain and Ireland.
Verslo Zinios

Thursday, 22nd of April

Good news for gas users
The price of natural gas supplied to consumers will shrink as of July. The National Control Commission for Prices and Energy plans to correct the margin limit of the gas price for a year.
The head of the Commission Vidmantas Jankauskas said the price of natural gas might reduce by 2-5 cents per a cubic metre. Besides, the prices of gas transmission for the biggest consumers will be reduced by 10 percent.
According to Jankauskas, gas prices will be reduced thanks to the lower price of gas purchased from Russia and the surplus profit posted by the fuel supplier Lietuvos Dujos (Lithuanian Gas).
Last year, Lietuvos Dujos operated extremely profitably. The company’s profit constituted 18.4 percent of its capital. Provided that the company’s profit is bigger than 15 percent, tariffs of gas transmission, distribution and supply services are reduced for the consumers.
Representatives of the German concern Ruhrgas, a shareholder of Lietuvos Dujos, are dissatisfied with such profit regulation rules applied to the company.
Lietuvos Rytas

OMHEX wants 100 percent of NSEL shares
OMHEX, the largest operator of stock exchanges in Northern Europe, has applied to the Lithuanian Securities Commission for permission to buy 100 percent of shares in the National Stock Exchange of Lithuania (NSEL).
OMHEX is in talks with the Lithuanian State Property Fund (SPF) to buy a 54.47 percent stake in the NSEL and a 32 percent stake in the Central Securities Depository of Lithuania (CSDL) after winning a bidding war against a consortium led by the Warsaw bourse and including the Euronext group of stock exchanges.
OMHEX earlier asked for the regulatory approval to buy a 34 percent stake in the NSEL, saying that some small investors had agreed to sell their shares in the bourse.
Jolanta Kairiene, chief specialist of the Law and Supervision Department under the Securities Committee, says that unless OMHEX acquires SPF permission, it will lose the voice right of the already purchased shares.
Respublika, Verslo Zinios, Lietuvos Rytas

Yukos goes down but it should not take Mazeikiu Nafta to the bottom
The situation of the Lithuanian oil refinery Mazeikiu Nafta (MN) would worsen only in case the stable supply of raw material from Russia was disturbed. The fallen ratings of the Russian shareholder Yukos and ceaseless attacks of the Russian authorities against this oil giant have not influenced and will hardly influence the output of Mazeikiu Nafta and its financial operations.
This is the conclusion of the statements made by the representatives of the Lithuanian state institutions, the finance market and Mazeikiu Nafta in a meeting on Wednesday. Thus they reacted to the news about the worsening situation of Yukos.
Verslo Zinios

Wednesday, 21st of April

Disputes with Brussels will be available in Vilnius
The biggest lawyers’ firm of Lithuania are merging with the juridical service providers of other Baltic or European countries.
Norcous ir Partneriai, the most rapidly growing lawyers’ firm in Lithuania, has signed a cooperation agreement with the leading Finnish Roschier Holmberg, Latvian Lejins, Torgans and Vonsovics and the Estonian Raidla and Partners lawyers’ firms. Business consultants of the four countries will operate under a joint name Roschier Raidla and will provide services in all the European Union’s countries.
Few days ago, one of the biggest Lithuanian lawyers’ firms Lideika, Petrauskas, Valiunai ir Partneriai announced its new plans: the Lithuanian company together with the Estonian Lepik and Luhaar and the Latvian Klavins and Slaidins have established a joint Lawin group, which aims at becoming one of the biggest business law service providers in the Baltic countries.
The leading partner of Lideika, Petrauskas, Valiunas ir Partneriai Rolandas Valiunas says the Baltic countries are seen as a single market. According to him, now it is time to strengthen cooperation in the region.
Lietuvos Rytas, Kauno Diena

Railway company will install a program worth LTL 14.72 million
Lietuvos Gelezinkeliai (Lithuanian Railways or LG) and a Latvian IT company MicroLink Lavia signed an agreement on Tuesday, pursuant to which an information finance accounting and business management system mySAP will be installed in the railway company. The project value amounts to LTL 14.72 million.
A consortium of MicroLink Latvia, IBM Lietuva and Baltic Amadeus won the public tender of LG for installation of the business resource management system mySAP.
On the whole, LG plans to allocate over LTL 385 million for investments this year. The most important investment trends are railway infrastructure, equipment and information technologies.
Verslo Zinios

Turnover of Sonex Grupe increased
Sonex, Lithuania's biggest IT group, has reported sales of LTL 35.4 million for the first quarter of 2004, a 31 percent rise since the same period a year ago.
Sonex Group forecasts a 47 percent growth in annual sales to around LTL 285 million this year.
Henrikas Genutis, CEO of Sonex Group, says good results of the last year and the successful start of this year have encouraged the company’s investors, Scandinavian Baltic Development Fund controlled by the European Bank for Reconstruction and Development, to acquire a new equity issue and boost its share in the company from 29 percent to 36 percent.
He says Sonex will focus on the development of IT services this year.
Verslo Zinios

Tuesday, 20th of April

Kalnapilis won two golden awards
Kalnapilis-Tauras Group, one of Lithuania's leading beer producers, won two awards in the World Beer Cup competition that was held in the United States.
Kalnapilis Original won a gold medal in the Munchner-Style Helles category and Kalnapilis 7.30 picked up a gold medal in the German-Style Heller Bock/Maibock category.
393 world’s breweries with 1,566 beer brands participated in the competition. The beer brands were evaluated in 81 categories. For instance, Kalnapilis Original was the best among 38 beer brands.
The heads of Kalnapilis-Tauras are most proud that their new product – Kalnapilis Original – has won the highest award. This beer brand was presented in Lithuania only in March.
Dainius Smailys, a spokesman of another leading Lithuanian brewery Svyturys-Utenos Alus, says their priority is to please the particular taste of Lithuanian users. According to him, blind tests ordered by the company revealed that Svyturys beer is the leader in terms of quality and taste. Recently, the brewery has presented Utenos Auksinis beer and promises another surprise for the clients in near future.
Lietuvos Rytas, Respublika, Lietuvos Zinios

Hardware negatively affects profitability of IT companies
Hardware trade pulls down IT companies however they are compelled to continue selling hardware in order to please clients. Meanwhile companies that offer only IT services post higher profits.
Relying on VZ data, the proportion of the profit and sales announced by UAB Sonex Grupe in 2003 amounted to 3.7 percent, AB Alna – 2.6 percent, Informaciniu Technologiju Grupes – 19.1 percent, UAB Baltic Amadeus – 3.7 percent. These indices imply that market leaders yield to the companies that post several times smaller turnovers in terms of sale profitability. This has been preconditioned by companies’ activities, since profitability of companies providing exclusively IT services is higher than that of the companies selling hardware.
Verslo Zinios

Successful quarter of Bennet Distributors
Bennet Distributors, one of Lithuania's largest tobacco product and alcoholic beverage importers, has reported a 53 percent year-on-year rise to LTL 17.6 million in the first-quarter sales of alcoholic drinks.
Jaunius Ziogas, CEO of Bennet Distributors, said the company anticipates a further growth in sales, as prices of imported alcoholic beverages are forecast to go down after Lithuania joins the European Union.
Bennet Distributors estimates that it holds a 10 percent share of the Lithuanian vodka market.
Verslo Zinios

Monday, 19th of April

Lithuanian tourism sector undergoes bad times
Lithuania is known as the country of extreme entertainment among foreigners. Many of them come to Lithuania for a 10-minute flight with a fighter plane L-29. Lithuania has a single certified flying centre in Europe, where civilians can fly on fighter planes, too.
However, representatives of the tourism business claim that the situation in the Lithuanian tourism market is very bad. According to them, the country does not pay sufficient attention to the incoming tourism. State does not fund the country’s advertising abroad, while for the private business such advertising is too expensive.
Lithuania lacks information signs on the roads, while plane tickets to Lithuania are still expensive because it is not included in the route maps of cheap flight companies.
Alvitis Lukosevicius, director of the Tourism Department, told Lietuvos Rytas that it is planned to allocate LTL 4.7 million for tourism in the nearest future. The money will be spent on exhibitions and spread of information about Lithuania.
Last year, the number of tourists who visited Lithuania increased a bit. However, the general foreigners’ flow has been declining since 2001. In 2002, 3.999 million foreigners visited Lithuania, a 4.7 percent decline year-on-year.
Lietuvos Rytas

Vilniaus Bankas might lose millions
A dispute between the Lithuanian Finance Ministry and Vilniaus Bankas, the country's biggest commercial bank that is owned by Sweden's SEB, may go to the arbitration court in Stockholm.
The Finance Ministry has appointed a working group to begin negotiations between the two parties. If no agreement is reached, the dispute will be referred to arbitration.
Vilniaus Bankas is suspected of having violated the terms of an agreement signed by SEB, its strategic investor, and the Finance Ministry. Under this agreement, Vilniaus Bankas committed itself to creating 300 new jobs and thus obtained a five-year exemption from the corporate profit tax, which has saved the bank about LTL 103 million in taxes.
Now it stands to lose a large part of the money if it is fined for violating the agreement.
Lietuvos Zinios

Lidl comes to Lithuania due to hard times in Germany
The German retail trade chain Lidl is to open the first four stores in Lithuania in autumn, Hans Nell, CEO of UAB Inter-Trakas reports. Inter-Trakas hopes to be the provider of shelves to Lidl. In the opinion of Mr. Nell, Lidl will be quite popular in Lithuania.
The slowdown of growth in Germany has helped Lidl to make its mind about expansion in other countries.
Lidl is already negotiating on the purchase or rent of lots in Lithuania. Experts of the commercial premises market forecast that the German chain will open the first stores in smaller towns thus creating bigger competition for small traders.
The heads of VP Market, the operator of a Lithuanian low-price chain Saulute, remark that a single weapon of the new competitor is price therefore they have already started preparing for its coming.
Verslo Zinios

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