Observer "Lietuva"

WEEK 18th

Friday, 30th of April

Lithuania’s leading IT companies will swap subsidiaries
Alna and Sonex Group, Lithuania's two leading IT companies, have announced plans to swap their business units – Alna is taking over the business solution and programming business, while Sonex Group is taking over the IT infrastructure solution business.
Under the terms of the swap, Alna is to buy 100 percent of shares in each of Sonex's two subsidiaries, Sonex Sistemos (Sonex Systems) and Softex Latvia, while Sonex Group is to take over 100 percent of Alnos Infrastrukturos Sprendimai (Alna Infrastructure Solutions), a company that has been recently set up by Alna.
Thus the companies will strengthen their specialisation in certain areas. Sonex Grupe will orient at creation of IT infrastructure solutions, while Alna will focus on business management system and programming services. Thus they will become the companies with the biggest resources in their activity spheres in the Baltic countries.
The financial details of the deal are not announced.
Lietuvos Rytas, Verslo Zinios

Sanitas buys a competitor
Sanitas, Lithuania's biggest pharmaceutical producer, signed an agreement on purchase of 39.96 percent in Endokrininiai Preparatai, the Kaunas-based pharmaceutical company.
Darius Sulnis, chairman of Sanitas Observers’ Board, confirmed that the deal has taken place. “Our goal is clear: to strengthen Sanitas positions not only in the Lithuanian market but also in the Baltic pharmaceutical market. Sanitas is a leader among the Lithuanian producers, Endokrininiai Preparatai is also one of the strongest companies,” thus Sulnis commented on the purchase.
According to him, it will become clear in the coming months how these companies will continue functioning. The sum of the deal is not announced.
Sulnis told V_ that the company was considering a possibility to acquire other pharmaceutical companies. Verslo Zinios

State and companies will take cheaper loans
Fitch Ratings, the international rating agency, on Thursday assigned for ten new European Union (EU) members the ceiling ratings, which will replace previous long-term foreign currency credit ratings assigned for those countries before.
Lithuania's rating has been upgraded to A.
"Sovereign ceiling ratings reflect the approach of Fitch towards the capital and currency market control in each country, which hinders or aggravates for the private sector the conversion of local money into foreign currency or currency transfers to foreign creditors. Membership in the EU, considering the institutional and political requirements, reduces the costs of transfer and conversion," Fitch said in a press release.
The ceiling ratings assigned for all new EU member states exceeded previous long-term foreign currency credit ratings by two notches.
New ratings will offer the strongest banks and entities of EU freshmen a chance to make better use of capital market resources, Fitch noted.
Lietuvos Zinios, Lietuvos Rytas

Thursday, 29th of April

Cheaper fuel will not gladden us soon
Upon entering the European Union (EU), Lithuania renounces 15 percent fuel import tax. As of May 1, European customs duties will be applied in Lithuania: 4.7 percent tax for petrol, while diesel fuel will be imported without a customs tax.
Representatives of companies trading in fuel in Lithuania claim that prices of fuel in Lithuania should reduce due to reduced import customs.
The fuel will not grow more expensive due to EU excises because Lithuania has been applying petrol and diesel fuel excises that meet the minimal EU level as of January 1, 2004.
Since the beginning of this year, the excise tariff of petrol has been 1,318 per 1 ton, the excise tariff of diesel fuel is LTL 1,002 per 1 ton.
Lietuvos Zinios

Growth of GDP remains surprising
Lithuania's gross domestic product (GDP) soared by 7.5 percent in the first quarter of 2004, in year-on-year terms, the country's Statistics Department has announced. A similar growth is forecasted for this year as well.
According to the preliminary calculations of the Statistics Department, Lithuania’s GDP stood at LTL 13.156 billion in January-March 2004.
A rise in added value was observed in nearly all economic segments, in manufacturing and manufacturing service entities in particular.
Added value in manufacturing surged by 10.5 percent, in manufacturing service companies - by 8.2 percent in the first quarter, compared with the January-to-March period of 2003. Meanwhile, added value in other service entities climbed by mere 2.9 percent in the reporting period.
Verslo Zinios, Kauno Diena

Lithuanian IT giants merge
The biggest Lithuanian IT companies AB Alna and UAB Sonex Grup_ have decided to merge a part of their businesses. Specialists claim that such a merger will benefit both companies and will boost their attractiveness in the eyes of foreign investors.
Relying on V_ data, AB Alna and UAB Sonex Grup_ will merge their affiliates; the reorganization will not affect the structure of the main companies.
Heads of Alna and Sonex have categorically refused to comment on the strategic decision.
Market experts do not rule out a possibility that having merged a part of their business and having focused on certain activities, the companies will find it easier to compete in the foreign and domestic markets. They both will benefit from this step: Alna will get rid of detrimental companies, while Sonex will boost its growth.
Verslo Zinios

Wednesday, 28th of April

Foreign trade deficit shrinks each year
Lithuanian exports rose by 9.1 percent in 2003, compared with 2002, while imports grew at a 6 percent rate, final data released by the country's Statistics Department has shown.
Lithuania's foreign trade deficit reached LTL 8.124 billion last year, narrowing by 1.8 percent from the previous year, according to the data based on customs declarations.
Lithuanian exports totalled LTL 22.145 billion in 2003, of which exports of goods processed in this country accounted for 25.1 percent (LTL 5.56 billion) and re-exports from customs bonded warehouses for 4 percent (LTL 882.5 million).
Total imports into Lithuania reached LTL 30.269 billion last year, of which commodities imported for processing represented 13.8 percent (LTL 4.185 billion) and imports into customs warehouses made up 5.8 percent (LTL 1.747 billion).
Lietuvos Rytas, Lietuvos Zinios

CBA Aibe grows stronger
The retail group CBA Aibe, which operates in Lithuania and Latvia, has reported total sales of LTL 167.8 million for the first quarter of 2004, a 17.3 percent rise from sales of LTL 143 million in the same period last year.
The chain's Lithuanian sales increased by 6.7 percent, year-on-year, to LTL 114.2 million.
Lithuania's CBA Aibe is comprised of 443 stores across the country.
According to Egidijus Aleinikovas, director of Aibes Mazmena, the growth in Lithuanian sales was due to an increase in the centralized supply of goods to the chain's stores and investments in marketing, as well as cuts in prices. He says the company has strengthened the logistics and wholesale department and plans to expand the goods assortment.
Verslo Zinios, Lietuvos Rytas

One of the largest brewers incurred losses
Kalnapilis-Tauras Group, one of the largest Lithuania's beer producers controlled by Danish Brewery Group, reported losses of LTL 5.574 million on a turnover of LTL 102.992 million for the full 2003.
The shareholders of the group decided to transfer the losses incurred last year to the next financial year.
Lietuvos Rytas

Omnitel will litigate with Tele2
The country’s largest mobile communications operator Omnitel will address the court about the advertisement of another mobile communications operator Tele2, which was announced as a reply to the new advertising campaign of Omnitel, where the company claims that it offers the best average call price. It will be the first time when the mobile communications operator will address the court about the competitor’s actions in the advertising sector.
Tele2 has addressed the Competition Council about Omnitel’s advertising and launched a new advertising campaign, where it accuses Omnitel of misleading users and says that the services of Tele2 are the lowest priced.
Omnitel claims that the statement of Tele2 that Omnitel misleads users should be evaluated as harm to the company’s reputation. The operator also accuses Tele2 of dishonest competition.
Eurocom, the virtual operator that provides services via the network of Bite GSM has also accused Omnitel of users’ disorientation. According to the virtual operator, service prices of the virtual operators using the network of Bite are the lowest-priced.
Lietuvos Rytas

Tuesday, 27th of April

Pike for cheaper cigarettes
From May 1, five of fifteen countries of the European Union will apply quantity restrictions on cigarettes imported without excise from Lithuania.
Lithuanian travellers visiting Denmark, Finland, Sweden, Germany and the United Kingdom will be allowed to bring a maximum of 200 cigarettes without paying an excise in a personal baggage.
The restrictions are to be applied until December 31, 2009, when the transition period of Lithuania for reaching the minimal cigarette excise tariff will be over.
A combined excise tariff is imposed on cigarettes in Lithuania: LTL 47.5 per 1,000 cigarettes plus a 15 percent ad valorum tax.
The minimal EU tariff that Lithuania will have to reach by 2010 is EUR 64 per 1,000 cigarettes.
Lietuvos Rytas, Kauno Diena, Lietuvos Zinios

1/5 of residents receive non-taxed revenues
Nearly a fifth of Lithuania’s residents receive non-taxed income, while 3.5 percent of workers receive salaries “in envelopes”, the survey of the Market Analysis and Investigation Group carried out in April reveals.
According to the survey, 80.3 percent of Lithuanians do not receive non-taxed revenues, while a third of people who do receive such revenues are 20-29 years old.
The respondents who receive non-taxed revenues said such revenues constituted up to 10 percent of their general monthly income, while 31.9 percent said such revenues amounted to 10-25 percent of the general income. 4.6 percent and 7.1 percent of the polled said non-taxed revenues constituted 51-75 percent and 76-95 percent of their general income, respectively.
Kauno Diena

Alita netted LTL 2.4 million in the first quarter
Lithuania's sparkling wine producer Alita, the leader of Lithuania's alcohol sector by sales in 2003, recorded unaudited net earnings of LTL 2.418 million for the first three months of 2003, a 5.2-fold rise versus the January-to-March period of last year.
Turnover of the company, which changed the owner in early 2004, surged by 26 percent, year-on-year, to LTL 18.424 million in the reporting period.
For 2003 Alita reported net earnings of LTL 9.201 million, a 2.85-fold rise from 2002. Revenues of the sparkling wine producer grew by 16.3 percent, to LTL 107.2 million, from LTL 92.178 million in 2002.
In 2004 the company sees its turnover going down to LTL 93.5 million, with net earnings slumping to LTL 6 million, amid harsher competition.
Alita, controlled by Invinus, a company established by the executives of the distillery, is one of the aspirants taking part in the privatization of Anyksciu Vynas (Anyksciai Wine), the largest Lithuania's wine producer.
Respublika, Verslo Zinios

MN departments operate profitably
The refinery and the crude terminal of Lithuania's Mazeikiu Nafta (Mazeikiai Oil or MN) oil complex ended the year 2003 above the line amid a growth in crude refining margins and a rise in crude exports via the Butinge terminal.
Traditionally, the Birzai pipeline reported net annual earnings, whereas the network of petrol stations operated by the oil complex, ended the year in the red.
MN refinery complex, operated by Russia's oil giant YUKOS, reported operating profit of LTL 155.725 million, as against operating losses of LTL 12.897 million recorded for 2002.

Monday, 26th of April

Insurance market shrank by 8 percent
In January to March of this year, the insurance companies in Lithuania collected LTL 208 million in premiums, or 8.3 percent less than it collected during the same period in 2003. Benefits paid out during the first quarter equalled LTL 69 million, nearly 12 percent less than the amount a year ago, the State Insurance Supervision Commission said in a report.
The insurance authority attributed the year-on-year contraction of the non-life insurance market to 39.4 percent lower income in the mandatory vehicle liability insurance sector. Excluding this sector, the non-life insurance market rose 10.6 percent in the first quarter.
Verslo Zinios

Oilmen will run abroad
AB Geonafta claims t Color hat it has plans to extract oil in foreign countries and plans to move its business there unless the Government organises new tenders for licenced oil fields. The currently exploited oil fields will dry up in several years.
Geonafta is worried that unless the new oilfields are found, this branch of industry might ruin in several years. The heads of the company claim that this will harm the state first of all because it receives a big part of revenues of the oil company.
Rimandas Stonys, deputy chairman of Geonafta board, claims that the general level of oil mining, which has been declining rapidly over the last years, is the main reason of concern.
Last year, the amount of oil extracted in Lithuania was 12 percent smaller than the previous year. In the first quarter of this year, the oil extraction reduced by 16.6 percent.
According to Stonys, in order to preserve the oil mining industry and to retain the oil mining level, it is necessary to find and start exploiting new oilfields.
Verslo Zinios, Lietuvos Zinios

Wind power plants to be built in seaside
The first park o Color f wind power plants is to be built in Kretingale sub-district, Klaipeda region, this year. It is planned to invest some EUR 45 million in the wind power plants that do not pollute the atmosphere and nature.
The company Gargzdu Statyba (Gargzdai Constructions) started assembling the first wind turbine of 900 KW capacity in Peskojai village last year.
A joint Lithuanian-Danish company BNE has undertaken the ambitious project. It is planned to build 24 wind power plants in the area of 11 hectares. The general capacity of the wind power plant park will amount to 30 MW.
Specialists forecast that the fever of wind power plant building will start in the Lithuanian seaside in near future: Klaipeda district municipality is considering 10 applications on construction of the alternative energy production parks at the moment.
Lietuvos Rytas

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