Observer "Lietuva"

WEEK 31st

Saturday, 31st of July

Danish concern purchased juice factory
Upon acquiring Latvian Cido, Danish Brewery group expects to boost exports of the Lithuanian brewery Kalnapilis-Tauro Grupe to Latvia. Danish Brewery Group is the owner of Kalnapilis-Tauro Grupe.
The Danish company, producer of Faxe beer, also hopes to strengthen positions of Cido in Lithuania, where the latter holds up to 14 percent of local juice market and is in the second place after German capital enterprise Elmenhorster Vilnius, which has 40 percent share.
The Danish group is to pay to stockholders of Cido Food group EUR 15.5 million for 100 percent stake of Cido.
CEO of Kalnapilis-Tauras Grupe, Valdas Tekorius said the company had no plans to start distribution of Cido Food Group's output in Lithuania.
He also underlined that Latvia remains one of priority markets for the exports of the group-made beer.
Lietuvos Rytas

Svyturys-Utenos Alus will be producing alcohol cocktails
Svyturys-Utenos Alus, the leading brewery in the country, is now licensed to produce fermented and non-alcoholic drink cocktails as well as drinks with alcohol content.
On July 23, the tobacco and alcohol control authority has supplemented the licence issued to Svyturio-Utenos Alus in October last year with alcoholic drinks the alcohol content in which may reach as high as 22 percent.
Svyturys-Utenos Alus presently produces beer, cider, kvass and mineral water.
Saulius Galadauskas, director of corporative affairs for the Baltic countries of Svyturys-Utenos Alus, admits that the brewery seriously aims at the segment of alcohol cocktails because this market is developing at a rapid pace.
The brewery reported sales of 5.61 million dekalitres for the first six months of this year, 3.7 percent more than in the same period of 2003. In the first half year, the company controlled 46.9 percent of the domestic beer market compared to 48.15 percent a year ago.
Lietuvos Rytas

Profit of Lietuvos Dujos shrank
Lithuania's natural gas company Lietuvos Dujos (Lithuanian Gas), which is controlled by German and Russian investors, reported LTL 51.4 million in pre-tax profit for the first half of 2004, a 24.2 percent decline since the relevant period last year.
A decline in gas prices for end users weighed the company's revenues down by 9 percent, to LTL 228.6 million. The Lithuanian gas company reduced prices four times in 2003-2004.
Lietuvos Zinios, Lietuvos Rytas, Respublika

Friday, 30th of July

Mazeikiu Nafta rakes profit
Even though there is real threat that oil supply to Mazeikiu Nafta (Mazeikiai Oil or MN) concern from Russia might be suspended, at present the results of the Lithuanian oil refinery are quite impressive.
Mazeikiu Nafta has announced audited consolidated net earnings of LTL 232.242 million, based on US GAAP, for the first six months of 2004.
Paul Nelson English, director general of MN, claims that these were the most profitable six months over the company’s history. The success has been preconditioned by big margins of oil procession and record procession volumes.
On Thursday, the oil refinery reported that its net profit reached LTL 128 million for the second quarter of this year, compared to LTL 41.7 million loss incurred over the relevant period a year ago.
6-month revenues of MN amounted to LTL 3.1 billion, a 38.5 percent rise since the relevant period last year.
Lietuvos Rytas, Lietuvos Zinios, Kauno Diena

Three new digital TV broadcasters
Digital television broadcasts in Vilnius might be launched by three more companies that will emerge as winners in a new tender on licenses for digital television broadcasts and re-broadcasting.
The tender results would be announced by October 6.
The tender on digital broadcasts on Channel 53, which was held in April, saw the triumph of LNK, TV1 and Balticum TV broadcasters.
Officially, the broadcasters awarded with these licenses shall launch broadcasts via the digital station from September.
Vilnius residents may access the channels via a special television set attachment priced at approximately LTL 300.
Verslo Zinios, Lietuvos Zinios

Factoring turnover increased by a third
Relying on the data of the Lithuanian Leasing Association, factoring service volumes increased 30 percent in the first half of this year. Specialists forecast that this service will continue gaining popularity this year and its annual turnover will reach LTL 3.5 billion.
Factoring turnover amounted to LTL 1.475 billion for the first half of this year, compared to LTL 1.136 billion turnover achieved over the same period last year.
At the end of the first six months of this year, the factoring portfolio constituted LTL 545.8 million, a 27.1 percent rise since the relevant period last year.
Verslo Zinios

Thursday, 29th of July

Leader promises fiercer competition
In spite of the growing expenses, the biggest mobile communications operator of Lithuania Omnitel has retained its market share.
While presenting company’s results, the president of Omnitel Antanas Zabulis rejoiced that the market share of the company remains unchanged under the conditions of fierce competition.
Omnitel’s 6-month revenues stood at LTL 394 million. According to Omnitel, it controlled 47 percent of the mobile communications market at the end of June.
The number of company’s clients increased by 8.2 percent (to 1.14 million).
According to the activity report of the Scandinavian telecommunications company TeliaSonera, which controls Omnitel, the company’s pre-tax profit amounted to LTL 87.3 million in the second quarter of this year, a 4.1 percent decline since the relevant period last year.
Zabulis noted that the mobile communications market of Lithuania was nearly saturated and might reach the average penetration rate of the EU countries by the end of the year – 80 percent. He forecasts that competition in the market will grow even stronger.
Lietuvos Zinios, Respublika, Kauno Diena, Lietuvos Rytas, Verslo Zinios

Lithuania’s GDP grows
Lithuania's gross domestic product (GDP) soared by 6.9 percent in the second quarter of 2004, in year-on-year terms, the country's Statistics Department has announced.
Lithuania's gross domestic product reached LTL 15.116 billion in the April-to-June period. Production and production service companies created the biggest additional value over the given period.
In the first half-year of 2004, the GDP of Lithuania amounted to LTL 28.279 billion, a 7.3 percent rise year-on-year. The additional value created by industry and construction companies increased more than 12 percent over the given period.
Last year, Lithuania’s GDP increased 9 percent.
Verslo Zinios, Lietuvos Rytas, Lietuvos Zinios, Respublika

Only Hungary surpassed Lithuania
The newest Bertelsmann Fund report gives Lithuania's progress a 9.6 rating out of 10. Among 116 countries, rated on the basis of political and economic effectiveness criteria, Lithuania shares its second place with the Czech Republic, Slovakia and Slovenia.
According to a press release from the government press service, the report contains the latest (1998-2003) Bertelsmann Fund progress ratings of 116 countries. The research study paid most attention to three main aspects: development level, specific issues and the effectiveness of political activity.
Hungary received the highest 9.7 rating from the fund. Estonia was in the 6th place, Poland, the 7th, Latvia, the 12th, Russia, in the 41st place, and Belarus, in the 85th place.
The report also mentioned that the Lithuanian government proved to be flexible in its attempts to overcome the Russian economic crisis.
Lietuvos Rytas, Verslo Zinios

Wednesday, 28th of July

Revenues of Lietuvos Telekomas shrink
Jan Erik Elserius, head of the Finance Section of Lietuvos Telekomas (LT), claims that subscribers of the company tend to use fixed-line services more. However, he regrets that the increased usage of fixed-line services did not cover the company’s expenses on the new pricing system. LT had been compelled to introduce the new pricing system due to “strange competition” in the local telecommunications market.
If compared to the revenues for the first half of the last year, LT’ revenues in the first half of this year reduced 10.6 percent (to LTL 365 million). Having cut the expenses, the company posted LTL 13.2 million net profit for the first six months of this year, or 11.2 times more since the relevant period last year.
According to specialists, increasing revenues brought by internet and data transmission services have not compensated reduced revenues from calls.
The number of LT internet clients has more than doubled over a year and amounted to 32,000 as of late June. However, revenues from the internet and data transmission services increased only 6.7 percent over a year due to fierce price competition.
Lietuvos Zinios, Verslo Zinios, Respublika, Lietuvos Rytas

Gambling business develops at a rapid pace
Gambling organisers received 2.6 times more revenues in the first half of this year if compared to the relevant period last year – LTL 165.5 million. The gambling business developed very actively in Vilnius but its development will be halted by the decision of Vilnius local government not to issue permissions to open new casinos until the schema of their development is ratified.
Lithuania's gaming industry won a total of LTL 39.953 million from gamblers in the first half of 2004, a rise of almost 2.45 times from the same period a year ago.
Ceslovas Blazys, chairman of the State Gambling Supervision Commission, says the gambling market is developing at a rapid pace: the results of the gambling institutions for the first half year nearly equal the results for the whole year 2003. He says there is space for expansion. According to foreign experts, there can be 10,000-15,000 gambling machines in the country, while there are only 1,000 of them in Lithuania.
Three companies dominated the market in the first half year; they received 55 percent of the market’s revenues and 66 percent of the pre-tax profit. The three companies are UAB Olympic Casino Group Baltija (LTL 54.4 million revenues and LTL 15.6 million profit); UAB Grand Casinos Europa (LTL 20.2 million and LTL 5 million) and UAB Nese (LTL 17.2 million and LTL 5.6 million).
Verslo Zinios, Lietuvos Zinios, Respublika, Lietuvos Rytas

Digital photo cameras are not very popular in Lithuania
Increasing popularity of digital photo technology does not seem affect the Lithuanian fans of photography that tend to chose film rather than digital photo cameras. Nevertheless, specialists claim that in the long run the photo laboratories that will not be able to make photographs from digital medium will have to withdraw from the market.
Employees of companies trading in photo technologies and providing photo services claim that the most popular digital photo cameras among Lithuanians are the ones produced by Olympus, Canon, Pentax, Nikon, Fujifilm and Minolta.
Dainius Jaudegis, trade director of UAB Gariva, claims that majority of buyers choose cheaper digital photo cameras, quality of which is only minimal. UAB Gariva represents Fotocentras, which has 50 laboratories in Lithuania. 11 out of 50 laboratories of Fotocentras produce photographs from digital files. According to Jaudegis, orders to make photographs from digital files constitute only a third of all the company’s orders.
Other companies providing similar services also say that they make more photographs from films than from digital files.
Verslo Zinios

Tuesday, 27th of July

Politicians fill advertising market
Advertising volumes rose in all core advertising media in Lithuania in the first six months of 2004, however, television and outdoor advertising posted the highest growth rates in the reporting period, the data released by the market research company TNS Gallup has shown
Political advertising has been the most important factor that preconditioned rapid growth of the advertising amount in the first half of this year. The approaching parliamentary elections give grounds for optimism concerning the annual results, while experts mention a possible increase in advertising tariffs in autumn.
TNS Gallup reports that the outdoors advertising volume increased the most, by 30 percent in the first half year. TV advertising volume increased 26.3 percent over the given period.
The biggest advertising clients this year are Procter&Gamble, Tele2, VP Market, Omnitel, Svyturys-Utenos Alus, Beckister, Bite, Berlin-Chemie, Kraft Foods and Unilever.
The biggest amount of TV advertising seconds fell per TV4: the advertising volume in this television increased 35.8 percent, to 1.2 million seconds. TV4 was the leader with regard to the advertising volume last year as well.
Verslo Zinios, Lietuvos Zinios, Kauno Diena, Lietuvos Rytas

Japanese promise a billion
Japanese investors are considering an opportunity to invest LTL 1 billion into the construction of a modern bio-ethanol fuel factory in the Kaunas district.
Upon the agreement of the Lithuanian government, the Japanese could start the construction of the factory in 2005, the Kaunas Municipality reported.
Gediminas Petrauskas, a member of Kaunas City Council, said that potential investors want the government’s back-up for guaranteeing subsidies for production of bio-ethanol. He added that the new factory could be built in 1.5-2 years; a certain amount of fuel would be sold in Lithuania, the rest would be exported to European countries.
Kaunas mayor Arvydas Garbaravicius, the Japanese government and Mitsui corporation representative Toshimori Fujita and the German company's ACS/GFT representative Giunter F. Tusel are to discuss the prospects of building a modern bio-ethanol factory in the Kaunas district on Tuesday.
Verslo Zinios, Lietuvos Rytas, Lietuvos Zinios

Shareholders invest in Lietuvos Dujos
Germany's gas and energy giant E.ON Ruhrgas and Russia's gas concern Gazprom have subscribed to a new issue of stock in Lietuvos Dujos (Lithuanian Gas), Lithuanian natural gas utility, Anicetas Ignotas, a secretary of the Ministry of Economy, confirmed.
Unofficial BNS sources have reported that purchase of shares pro rata current holdings would see Germany's Ruhrgas investing LTL 60.8 million into Lietuvos Dujos. Russia's Gazprom would allocate LTL 57.9 million.
Buyers shall settle payments for the shares by October 1.
Lietuvos Dujos launched a new LTL 170.439 million share issue on July 1. The shares will be on sale until the end of the month. Lithuania's government, the owner of 24.36 percent in the company, has ruled to shun from acquisition of new shares.
Verslo Zinios

Monday, 26th of July

TD Baltic will distribute Xerox
Having signed an agreement with an IT service wholesaler TD Baltic, Xerox plans to induce trade with small and average-sized companies and to become a leading distributor of printers and multi-functional devices in the Baltic countries.
Under the agreement, TD Baltic will become a distributor of Xerox products in the Baltic countries. ”We have thoroughly chosen the company that should be distributing our products in the Baltic States. Xerox, which was known as a company traditionally selling its products directly, has changed its strategy. We sell our products and provide services through the partners. We will offer the most favourable conditions of cooperation to any company that wishes to become our partner,” Janis Tsirch, head of Xerox agency in the Baltic countries, says. According to him, the company’s goal is to offer products in all the markets and to expand business at a more rapid pace than growth of the IT market.
Verslo Zinios

Free e-mail service does not bring profit in Lithuania yet
As free e-mail firms are expanding their services all over the world, Lithuanian free e-mail service providers do not plan to do so and some even limit the services because internet advertising in the country is not capable of maintaining free e-mail services.
Some Lithuanian portals that provide free e-mail services have already suspended registration of new e-mail boxes. Lietuvos Telekomas has already expressed its intentions to start charging for the services of Tako Pastas; Delfi had announced the same news even earlier.
Several biggest free e-mail service systems, including Tako Pastas (Takas Mail) of Lietuvos Telekomas, Delfi and One.lt, have some 1.2 million free of charge e-mail boxes.
As the number of e-mail boxes grows, expenses increase as well. Meanwhile internet penetration in Lithuania is not big enough for advertising clients to purchase online advertising.
Forticom, the company that supervises One.lt portal, and Penki Kontinentai, which has a free e-mail system Freemail.lt, do not plan to impose fees on the e-mail service or expand service possibilities in near future.
Lietuvos Rytas

Half-year profit of Vilniaus Vingis reduced to LTL 4.4 million
A deflective system producer Vilniaus Vingis posted LTL 4.389 million non-audited net profit for the first half of this year, or 21.4 percent decline since the relevant period last year.
In the first six months of this year, the company sold production for the sum of LTL 69.6 million, a 7.7 percent rise year-on-year. Boost in TV sales was preconditioned by the approaching Olympic Games and European Football Championship.
“The result of the first half-year is good, we planned LTL 3 million profit. The profit has declined since the lat year due to reduced prices of TV technologies on the global markets,” Darius Oziunas, finance director of Vilniaus Vingis, said. According to him, the company does not change the prognosis of LTL 8 million net profit and LTL 136 million revenues for 2004.
Verslo Zinios

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