Observer "Lietuva"

WEEK 29th

Saturday, 17th of July

Business giants fight over influence in electricity market
Two powerful business conglomerates VP Market and Achemos Grupe obviously cannot peacefully share the energy industry of Lithuania. In early July, the president of the Lithuanian Industrialists’ Confederation and president of Achemos Grupe addressed the acting president Arturas Paulauskas and the acting parliamentary chairman Ceslovas Jursenas and complained about VP Market. The owners of VP Market had acquired a power grid company Vakar_ Skirstomieji Tinklai (Western Distribution Grids) that Achemos Grupe had aimed at.
In his address to the country’s leaders, Lubys indicated that the amended Electricity Law has provided exclusive rights to the power distribution networks and to one of their owners – VP Market - to dominate in the market. He urged the acting president to veto the “corruptive” law.
One of the owners of VP Market, Mindaugas Marcinkevicius, declared that Bronislovas Lubys was using the Lithuanian Industrialists’ Confederation for protection of the interests of Achema Grupe.
Lietuvos Rytas

Zemaitijos Pienas sells more
Zemaitijos Pienas, Lithuania's third-largest dairy producer, has reported preliminary sales of LTL 134 million for the first half of 2004, a rise of 13.9 percent since the same period a year before.
"The sale prices went up this year. Moreover, the sales of ice-cream and other products at trade chains posted a solid growth. Another factor that prompted the rise in our sales was the expansion of VP Market supermarket chain," Stanislava Bertaviciene, Zemaitijos Pienas chief economist, said.
According to her, it is forecasted that Zemaitijos Pienas netted some LTL 3 million profit for the first half of this year, while the whole group of companies presumably posted over LTL 6 million profit.
Lietuvos Zinios

Number of internet banking users grows
The total number of internet banking users registered at 10 Lithuanian commercial banks reached 783,500 as of late June, representing a 23 percent increase from early January. The number of e-banking users surged 65 percent within a year.
The two biggest banks of the country – Hansabankas and Vilniaus Bankas – have 89 percent of the internet banking clients. Hansabankas controls 48.8 percent of the internet banking market, while Vilniaus Bankas has a 40.3 percent market share.
A market research company TNS Gallup confirms that an increasing number of country’s residents use internet banking services. Jurgita Rackyte, project manager of the company, the number of internet banking users among Lithuania’s residents using internet last year amounted to 17 percent, while in March-May of this year this figure increased to 22 percent.
Lietuvos Zinios

Friday, 16th of July

Sonex Grupe interested the bank
Lithuania's competition regulators gave a green light for the purchase and management of 36 percent in Sonex Group, the leading Lithuania's IT company, by the European Bank for Reconstruction and Development (EBRD).
EBRD, acting via its investment fund Scandinavian Baltic Development, raised its stake in the IT company to 36 percent in April through the purchase of new share issue.
Sonex Group, which has recently launched reorganisation programme, has an authorized capital of LTL 31.2 million.
The IT group announced unaudited pre-tax earnings of LTL 7 million for 2003, an increase of 34.6 percent from the previous year.
Sonex Group, which has operations in all three Baltic countries and Belarus, posted consolidated revenues of LTL 192 million for 2003, a rise of 32.4 percent from 2002. In the first half of 2004, the group's turnover surged by 34 percent, year-on-year, to LTL 83 million.
Lietuvos Rytas, Lietuvos Zinios

Small traders try to unite their forces
Small groceries in Lithuania, in a bid to combat the intense competition of giant retail supermarket chains, have closed ranks. On Thursday the national Competition Council issued permission to small groceries to set up a new chain of about 100 stores. The new chain, which will be called AVS Prekyba, projects combined annual sales of about LTL 170 million.
The founders of AVS Prekyba maintain that the merger will entitle the companies to purchase goods at attractive prices, coordinate their marketing strategies, and compete with local and overseas grocery chains.
The retail grocery network will be open to other companies, though every party in this cluster will operate independently and have the right to withdraw, the Competition Council stated.
Some time ago, some 450 stores formed a similar network named CBA Aibe. However, this chain is related to the country's leading retailer, VP Market. The owners of VP Market control Aibes Mazmena, the coordinator of the activities of CBA Aibe.
Lietuvos Rytas

Retail trade is growing
Lithuania's retail sales rose by 12.5 percent in the first half of 2004, in year-on-year terms, driven higher by a strong growth in sales of household appliances, construction materials and clothes, the Statistics Department has reported.
"The growth in retail sales was underpinned by rising incomes of the population," Ignas Staskevicius, chairman of the board at VP Market, the largest retail chain in the Baltics, said.
The aggregate turnover of retail stores, car service centres, filling stations, restaurants and other retailers reached LTL 7.494 billion during the first half of this year.
Lithuania's retail sales totalled LTL 17.641 billion in 2003 (VAT excluded), a rise of 14.3 percent over 2002.
Lietuvos Zinios, Kauno Diena

Thursday, 15th of July

Seimas will try to change taxes
The parliamentary Economy Committee will offer the government to discuss a possibility to legalise a progressive tax system.
On July 14, the committee decided to propose that a small tax would be charged for a certain part of residents’ revenues (residents’ revenue tax or GPM), while the rest of the revenues would be taxed 33 percent.
The initiator of the proposal, the Social Democrat Sigita Burbiene, says she does not propose specific figures because the government should make its mind about them considering the economic situation of the country.
According to Ms Burbiene, a progressive tax system is the most realistic way to reduce the social gap between residents.
The president of Lithuanian Cloth and Textile Companies’ Association Jonas Karciauskas claims that this decision is very bad. According to him, it would be the best if GPM was reduced by 3 percentage points starting the next year. “This would bring dividends soon, as it would compel employers to raise salaries for the employees and would raise competitiveness of Lithuanian companies,” Karciauskas said.
Lietuvos Rytas, Kauno Diena

6-month profit of banks increased
In the first half of this year, Lithuanian commercial banks posted LTL 134.33 million profit. Besides Vilniaus Bankas and Hansabankas, which dominate the market, profits of the rest of the banks constituted only 15 percent of the general profit.
The general banks’ profit is 7 percent higher than for the first half of the previous year, however, this year it increased at a slower pace than the last year. All the banks posted profit for the first half of the year, with the exception of Vilnius office of Kredyt Bank, which is to be merged with the Lithuanian branch of Nordea Bank in summer and Sampo Bankas.
The Lithuanian branch of Nordea Bank, which suffered quarterly loss last year and Vilnius branch of Vereinsbank, which posted LTL 0.1 million, netted LTL 1.8 million and LTL 1.5 million profits for the first half of 2004 respectively. Snoras bank has boosted its profit the most – 15 percent – to LTL 10.6 million.
The profit of Nord/LB Lietuva Vilnius branch shrank the most this year (98 percent), the profits of Parex Bankas and Siauliu Bankas reduced by 24 percent and 13 percent respectively.
Verslo Zinios

Second quarter more successful for Stumbras
Stumbras, the Lithuanian alcohol producer controlled by MG Baltic concern, reported unaudited losses of LTL 319,420 in the first six months of 2004.
For the first quarter of 2004 Stumbras announced unaudited losses of LTL 1.513 million.
The company's turnover declined 9.3 percent in the first six months of 2004, to LTL 39.483 million, from LTL 43.549 million in the first half of previous year.
The Kaunas-based company reported audited net earnings of LTL 11.477 million for the full 2003, a decline of 28.3 percent from 2002. The sales of the distillery slipped 7.1 percent, to LTL 94.33 million.
Stumbras is 99.3 percent owned by MG Baltic concern via the UAB Mineraliniai Vandenys subsidiary.
Verslo Zinios, Lietuvos Zinios, Lietuvos Rytas

Wednesday, 14th of July

Plan – to produce electricity out of gas
Minijos Nafta (Minija Oil), Lithuania's biggest oil producer, has been given the green light for the use of associated gas, which is found in oil wells, to generate electricity in the future.
The company said the environmental project, which has been approved by the Lithuanian Environment Ministry, is among the first initiatives toward implementing the Kyoto Protocol in Lithuania.
"Lithuania has ratified the Kyoto Protocol, committing the country to reducing greenhouse gas emissions. The use of associated gas for power generation is a step toward implementing these requirements," Robertas Klestornas, head of Minijos Nafta's health and environmental protection projects, said.
Lietuvos Rytas

E.ON Energie has not grounded arms
Germany's energy and natural gas group E.ON Ruhrgas has decided to liquidate its agency in Lithuania but has not abandoned its intention to buy Rytu Skirstomieji Tinklai (RST), the eastern part of Lithuania's national power grid, in the future.
"We have such intentions, and I believe that we will acquire this company when it is put up for sale," Saulius Bilys, E.ON Energie's representative to Lithuania, said. According to him, the adoption by the Seimas of a new Law on Electric Energy and the expected adoption by the authorities of electricity price regulation rules in the near future provide a more solid ground for evaluating the company.
The government's first attempt to sell RST fell through last year.
In Lithuania, Ruhrgas controls 35.7 percent of shares in Lietuvos Dujos (Lithuanian Gas), the market price of which amounts to LTL 353 million. E.ON Energie also owns a 20.28 percent stake in RST, worth nearly LTL 160 million.
E.ON Energie participated in RST privatization tender, however, it did not present a financial offer. The Estonian company Eesti Energia wanted to buy RST but the tender was cancelled.
Lietuvos Rytas

Profit of Nord/LB Lietuva shrank
Due to exceptionally low interest rates in the market, special provisions and other factors, Nord/LB Lietuva, Lithuania's third-biggest commercial bank by assets, made a net profit of LTL 176,000 in the first half of this year.
Thomas Buerkle, president of the bank, stressed that the 6-month result does not meet the bank’s plans, however, the revenues of the bank are growing every month: the net interest revenues increased 15.4 percent over the first half of this year, compared to the relevant period last year.
Nord/LB Lietuva reported LTL 2 million non-audited net profit for the first quarter of this year. Last year the bank controlled by the German banking group posted LTL 15.454 million net profit. It was projected to boost the profit to LTL 20.4 million this year.
The bank’s assets amounted to LTL 2.93 billion at the end of June (38.2 percent rise year-on-year), while the loan portfolio stood at LTL 2.02 billion (25.7 percent rise).
As of late May, Nord/LB controlled 11.52 percent of the country’s banking assets market, a 13.85 percent of the loan market and 11.69 percent of the deposit market.
Verslo Zinios, Lietuvos Zinios

Tuesday, 13th of July

New leader of brewery will seek to retain results of predecessors
Rolandas Virsilas, the new director general of the biggest Lithuanian brewery Svyturys-Utenos Alus, forecasts growth of Lithuania’s beer market and concentration. The new head of the company that was appointed on Monday claims that he will seek to retain the company’s indices and its market share.
Virsilas replaced Tomas Kucinskas in the post of the brewery’s director. Kucinskas has been appointed the board chairman of the company.
According to Virsilas, the priorities remain the same: beer, mineral water and cider. It is very important to retain the current share of the beer market, while the market shares of mineral water and cider could still grow.
Sales of mineral water and cider of Svyturys-Utenos Alus increased 7.5 percent in 2003.
Virsila forecasts that the high quality beer sector and beer consumption will increase alongside growing revenues of people. In his opinion, the amount of imported beer in the Lithuanian market will grow as well.
Verslo Zinios, Lietuvos Rytas, Lietuvos Zinios, Respublika

Information will be exchanged faster in Vilniaus Bankas
Vilniaus Bankas has centralised its administrative information system. The upgraded system will enable bank’s subsidiaries and branches to communicate and exchange information in a real time regime.
After centralisation of information systems, employees are promptly informed about the new bank’s services, changes in service provision terms therefore there is a possibility to pass solutions and serve clients faster. According to Vygintas Leipus, IT coordinator of Vilniaus Bankas, upgrading of technologies has made it possible to speed up the process of ratification of credits issued by the bank. An IT company Sekasoft has upgraded and centralised the management system of the bank.
Verslo Zinios

Output of Geonafta up by 5 percent
Lithuania's oil producer Geonafta, co-owned by Polish and Lithuanian investors, produced 54,400 cubic meters of crude in the first six months of 2004, a rise of 5 percent from the output of 51,700 cubic meters reported for the January-to-June period of previous year.
The six-month results exceeded the expectations as the company projected its output at 47,500 cubic meters of crude for the first half of 2004, Antanas Jasas, Geonafta CEO, said.
In early 2004 the company drilled a new well in the Girkaliai oil field, which yielded more crude than expected. Moreover, the oil producer raised the output on the back of arrangement of new equipment at two wells of oil field in Nausodis.
Relying on the data of Lithuania’s Ministry of Economy, local oil extraction declined by 16.5 percent in the first quarter of this year. Minijos Nafta and Geonafta produced the biggest amounts of oil in January-March 2004: 52 percent and 27 percent respectively.
Lietuvos Zinios, Lietuvos Rytas

Monday, 12th of July

Profit forecasts for Lietuvos Telekomas
Revenues of Lithuania’s biggest fixed-line operator Lietuvos Telekomas (LT) shrank by 0.10 percent over the first half of this year but market experts forecast that having reduced expenses the company has boosted its profit.
AB Hansabankas forecasts that half year revenues of LT decreased by 8.6 percent to LTL 372.8 million, while the company made a net profit of LTL 15.4 million.
The financial brokerage firm Finasta believes that the revenues of the largest fixed-line service provider will reach LTL 365-370 million and that the company will make a profit of LTL 7.9 million.
Vilniaus Bankas forecasts that half year revenues of Lietuvos Telekomas will reach LTL 365-375 million.
Lietuvos Telekomas posted revenues of LTL 407.9 million and a profit of LTL 1.2 million in the corresponding period of 2003.
Analysts agree that the company has managed to halt the reduction of subscribers’ number that had lasted for several years. As of late March 2004, Lietuvos Telekomas had 825,800 fixed-lines, compared to 859,200 lines at the end of June 2003.
Verslo Zinios

EUR 225 million for shutdown of Ignalina nuclear power plant
Donors of International Ignalina Decommissioning Support Fund (IIDSF) gave go-ahead for fifteen projects with a combined value of EUR 225 million, which are related to the shutdown of Ignalina nuclear power plant (INPP) and will be financed with the financial resources of the fund.
Next week a special European Commission committee should approve Lithuania's application for a grant of EUR 285 million from the IIDSF administered by the European Bank for Reconstruction and Development (EBRD). The committee is also expected to confirm precise terms for the transfer of funds.
Donors approved the funding required for the equipment of INPP dismantling, upgrade of training centre, construction of low-level radioactive waste burial trench and other works.
Moreover, support will be extended for projects on the upgrade of desulphurisation units and control systems at Elektrenai CHP, which would have to operate with full capacity after the shutdown of INPP.
Tenders on the abovementioned projects should be announced by year-end.
Verslo Zinios

Turnover of Senukai increased
First-half sales of Senukai, Lithuania's largest retailer of building materials and household goods controlled by Finland’s Kesko, reached EUR 125.9 million, a 92.6 percent rise year-on-year.
The Senukai Group, which employs around 2,600 people, achieved a 31 percent growth in annual sales in 2003, to EUR 196 million.
The chain, which holds a one-fourth share of Lithuania's building and household goods market, had 10 retail stores in Lithuania and one in the Latvian capital of Riga at the start of 2004.
Lietuvos Zinios

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