Observer "Lietuva"

WEEK 34th

Saturday, 21st of August

Lower cigarette prices gladden smokers
Since Lithuania’s accession to the European Union, excise goods – tobacco and fuel – have grown more expensive because our country must reach the minimal excise level set by EU countries. The cigarette excise should reach the EU level by 2009. In spring, it was forecasted that cigarette price would grow by some 20 cents every year and will amount to LTL 6-8 per pack in six years.
However, the retail trade chain of VP Market sells Barclay cigarettes at prices lower than in other chains; Bond and L&M cigarettes are cheaper in Rimi trade centres. Cigarette prices in kiosks have not reduced, meanwhile gas stations do sell some cigarettes at lower prices. As trade centres started reducing cigarette price, some cigarettes in market places became more expensive than in trade centres, e.g. Red&White.
Last year, retail prices of tobacco products increased 11.2 percent due to increased cigarette excise.
Kauno Diena

Buyers of foodstuffs and furniture – patriots
The latest survey by market researcher TNS Gallup has revealed strong preference for domestically made goods among Lithuania's residents.
The majority of country's residents tend to choose locally made foodstuffs, strong spirits, furniture and toys.
About 96.8 percent of respondents cited strong preference for Lithuania-made foodstuffs. Over 3/4, or 75.3 percent of the polled opted for domestically produced beverages, whereas 62.8 percent of respondents gave preference for locally made furniture.
Over a half of local residents, at 53.5 percent, would choose locally made toys for their children.
The survey has also revealed favourable opinion of country's residents about German and Japanese producers.
Over one-third of country's residents, at 38.3 percent, cited preference for German household appliances. More than a half of the polled, at 55 percent, would choose Japanese video and audio equipment, whereas 33.1 percent of domestic consumers would opt for a Japanese PC.
Lietuvos Rytas, Kauno Diena

Sanitas will enter real estate market
The biggest pharmaceutical company of Lithuania, Sanitas, is acquiring a 100 percent stake in the real estate company Altisana; the value of the deal is not publicised. Sanitas also plans to merge with another pharmaceutical company Endokrininiai Preparatai (Endocrine Preparations).
A joint Lithuanian-Norwegian venture Altisana is located near Sanitas. Donatas Jazukevicius, director general of Sanitas, says the real estate concept of the company will be announced later on.
“We are purchasing a business and we hope that this will make the company more competitive and efficient,” Jazukevicius says.
Kauno Diena

Friday, 20th of August

Prices increased
Healthcare and transport prices showed the steepest rise in Lithuania in July, in year-on-year terms, whereas communications prices posted the largest decline in the reporting period.
Healthcare service tariffs surged by 8.9 percent in July 2004 from July 2003. The prices of transport goods and services rose by 6.6 percent, foodstuffs and soft drinks - 4.5 percent in the reporting period.
Meanwhile, the prices of communications services plunged by 12.1 percent. Accommodation furnishing, household appliances and daily accommodation maintenance prices declined by 3.4 percent; leisure and culture prices - 2.1 percent, clothing and footwear - 1.6 percent.
Respublika

Mobile communications operators feel they have reached price bottom
The mobile communications operators claim that they have already shared the private subscribers’ market and will soon start competing for business clients.
Omnitel presented new company’s offers on Thursday. Thus the company aims to attract more clients and to retain its positions in the nearly saturated communications market.
Kestutis Peciulis, head of the Regular Payment Service Group of Omnitel, says people want easily understandable payment plans, smaller minimal fees and cheaper calls to family members. He presented 2 new payment plans of Omnitel Draugai (Friends) and Omnitel Extra that will replace the four payment plans offered by the company to the private subscribers.
The 6-month turnover of Omnitel, which has 1.4 million subscribers, reached LTL 394 million, and exceeded the turnover of the biggest fixed-line service provider, Lietuvos Telekomas, by LTL 29 million.
Competitors claim that this step of Omnitel was waited for and will not affect the already divided subscribers’ market.
Lietuvos Zinios, Lietuvos Rytas

Insurers aim at LTL 1 billion margin
Lithuanian insurance companies signed LTL 610.7 million worth insurance premiums over 7 months of this year, a 23.6 percent rise year-on-year. This means that Lithuanian insurers might collect over a billion litas in insurance premiums this year.
Jonas Berzinskas, president of the Lithuanian Insurers’ Association, claims that insurance premiums have increased so rapidly because of the increased insurance payments for drivers. The motor vehicle insurance grew more expensive after Lithuania joined the European Union.
LTL 183.5 million in damages were paid in seven months of this year, a 14 percent decline year-on-year.
Non-life insurance premiums worth LTL 486.9 million have already been signed this year, LTL 165.1 million in damages have been compensated. Life insurers have signed LTL 123.8 million insurance payments and paid LTL 18.4 million in damages.
Lietuvos Rytas, Respublika, Lietuvos Zinios

Thursday, 19th of August

25 percent of households have PCs
Relying on the data of the Statistics Department, 25 percent of households had computers in the first quarter of 2004. 32 percent of households in the city and 11 percent of households in the countryside used computers.
10.6 percent of households used internet in the first quarter of 2004.
Mostly, internet was used for communication, reading of electronic papers and magazines, etc. 77 percent of internet users used e-mail services, 71 percent – read or loaded internet magazines and papers.
More than 50 percent of respondents using internet had a private e-mail address, 23 percent of respondents used e-mails belonging to an institution or an organization.
0.7 percent of the polled or 2.1 percent of internet users purchased or ordered goods online for personal needs in the first quarter of this year. Majority of respondents (77 percent) said there was no need for them to use e-trade services. Every seventh respondent said shopping in a real store was more convenient; 9 percent of the polled did not trust e-trade.
Kauno Diena

Carriers
Turnover of TNT Lietuva, an express delivery and parcel transportation company, increased by 27.1 percent in the first half of this year and stood at LTL 4.4 million. TNT Lietuva carried 39.9 thousand parcels in the first six months of the year, a 25.8 percent rise since the first half of 2003.
Mr. Gailius, the head of TNT Lietuva, says transportation of parcels by land has become quicker since Lithuania’s accession to the European Union due to the lifted customs restrictions in the EU territory.
Lietuvos Rytas

Market leader fights over cigarettes
Smokers will be unpleasantly surprised in the trade centres of VP Market chain, as the cigarettes produced by Philip Morris (PM) are not available in the chain anymore. The tobacco shelves emptied after VP Market decided to change the terms of cigarettes supply and to purchase cigarettes directly from the producer. Ignas Staskevicius, board chairman of VP Market, says supply of PM production has not been fully cancelled: the cigarettes are bought and then sold in the wholesale market. He admits, however, that the retail trade in PM cigarettes has been suspended.
Philip Morris Lietuva does not comment on the conflict and the supply terms.
Lietuvos Rytas, Respublika

Wednesday, 18th of August

TeliaSonera – owner of 100 percent stake in Omnitel
Scandinavian TeliaSonera is expected to become the single owner of Omnitel, Lithuania's largest mobile operator, on Tuesday.
TeliaSonera reported that Amber Mobile Teleholding, one of the companies under its control, made a deal with the family of Juozas Kazickas, a Lithuanian-American millionaire, concerning the purchase of their 10 percent stake in Omnitel.
TeliaSonera will pay USD 63.5 million, a price which includes dividends for the Kazickas family. The stock price was calculated based on the company price set by the operator itself. According to this estimate, Omnitel is worth USD 603 million. The deal is to be finalised on Tuesday.
"The deal will become a very important move towards the implementation of the strategic plans of TeliaSonera, which deal with the desire to strengthen its presence in the Nordic and Baltic regions and improvement its level of customer service," Kenneth Karlberg, TeliaSonera's president for Norway, Denmark, and Baltic states said.
Omnitel reported earlier that its income in the first half of the year amounted to LTL 394 million, 6.2 percent more than the company's income during the corresponding period in the previous year.
Kauno Diena, Lietuvos Zinios, Respublika, Lietuvos Rytas, Verslo Zinios

Ministry forecasts bigger inflation
The country's Finance Ministry plans to raise the average yearly inflation forecast for 2004 by 1 percentage point from 0.9 percent to 1.9 percent due to a May price increase in food products and oil prices this year.
It is expected that the inflation level should reach about 2.4 percent by the end of the year; 1.4 percent was forecasted previously.
"Inflation will be raised equally this year – by about half of a percent – by increases in oil and food prices but decreased by a drop in prices of telecommunications services," Ricardas Kasperavicius, head of Macroeconomics Department at the Finance Ministry, said.
According to him, the earlier forecast was calculated when the US dollar began to rise, and oil product prices had temporarily dropped.
"The consumer price index is most influenced by price drops in telecommunication services and price hikes for health care, alcohol, and tobacco due the increasing cigarette taxes," Kasperavicius said.
Lietuvos Zinios, Lietuvos Rytas, Respublika, Kauno Diena

Consumption of Lithuanian sugar shrinks
Lithuania's accession to the European Union (EU), which resulted in a flow of cheaper sugar from abroad, has reduced the consumption of locally refined sugar considerably.
In July, sales of locally refined sugar made up 3,500 tons, a decline of 3.4 times from July 2003. Seven-month sales dropped by 23.9 percent, year-on-year, to 35,000 tons.
"The sales of Lithuanian sugar decline as domestic businessmen may import this product freely now. That is why Estonian, Latvian, Polish and even French sugar has found its way to Lithuania," said Rimantas Stulgys, president of sugar producers' association Cukrus (Sugar).
Some 60,000 tons of sugar were exported from Lithuania in the first half of this year, or 6.7 times more than over the same period last year.
The white sugar output quota assigned for Lithuania in 2004 totals 103,010 tons, almost unchanged from 2003.
The consumption of locally produced sugar reached 81,800 tons last year.
Lietuvos Zinios, Lietuvos Rytas

Tuesday, 17th of August

Sweet farmers’ profit is subsiding
The number of small sugar beet growers has been reducing in Lithuania lately. Traditionally, one of the biggest sugar beet growing areas is located in Southern Lithuania, where the conditions for cultivation of this agricultural branch are the best.
Gintaras Balnys, the chief agronomist of Arvi Cukrus (Arvi Sugar) company, claims that farmers of Marijampole, Alytus and Vilkaviskis districts grow sugar beets for their factory in 4,000 ha area. The agronomist remarks that the areas of the sugar beets have reduced by 16 percent in the recent years. As the quota of white sugar production has been reduced for Lithuania’s sugar factories, they have consequently reduced the quotas of sugar beet purchase.
The reduced quotas have struck the most painfully the small farmers. Some 100 small sugar beet growers in Marijampole district have handed over their quotas to the big farmers.
Some 15,000-20,000 people work in the sugar beet growing sector.
Lietuvos Zinios

Sanitas posted LTL 3.498 million profit
Sanitas, the largest Lithuania's pharmaceutical producer, reported LTL 3.498 million in net earnings for the January-to-July period, compared to LTL 315,000 loss incurred over the same period last year. The Kaunas-based pharmaceutical producer boosted its seven months sales by 35 percent, to LTL 24.381 million this year. The company’s export increased 36 percent, to LTL 18.746 million, during the reporting period. Turnover of Sanitas in the domestic market soared by 33 percent, to LTL 5.634 million.
Verslo Zinios

Retail trade grows 12.2 percent
Boosted by strong demand in household appliances, building materials and garments, retail sales in Lithuania grew by 12.2 percent in the first half of 2004, compared with the year-earlier figure, the country's Statistics Department announced on Monday.
The aggregate turnover of retail stores, car service centres, filling stations, restaurants and other retailers reached LTL 9.115 billion (VAT excluded) during the January-to-June period of this year.
Verslo Zinios

Monday, 16th of August

Turnover of Blue Bridge grows
Turnover of an IT company Blue Bridge amounted to LTL 26.9 million for the first half of this year, a 26.3 percent rise year-on-year.
Dalius Butkus, sales and marketing director of Blue Bridge, claims that better financial results of the company have been preconditioned by market growth and input of the previous year. Last year, Blue Bridge signed more agreements, worth more than LTL 0.5 million and the results are felt this year.
This year, the biggest Blue Bridge projects have been implemented in the state institutions, banks and telecommunications companies.
Verslo Zinios

Companies of Ergo group will operate jointly
Administration of six insurance companies of the Baltic countries controlled by the German Ergo group has been merged. Preparations for Baltic Synergy project of Ergo started in 2002 already. This year, the project has yielded the first fruits, as the joint observers’ board has been formed. It is headed by Kestutis Bagdonavicius, CEO of ERGO Lietuva.
The insurance companies in the Baltic countries will be controlled in a centralized way from Riga, Latvia. However, they will remain separate companies.
Presumably, the synergy project should help to economise EUR 0.5 million.
According to Bagdonavicius, this project will enable Ergo insurance companies operating in the Baltic countries to compete more efficiently. For instance, this year all the Baltic companies of Ergo group started purchasing health insurance services in foreign countries from a single company, thus economising funds, which has lead to reduced insurance policy tariffs.
Bagdonavicius claims that the main segment of Ergo companies in the Baltic countries are natural persons, small and medium-sized businessmen. However, the company is not to renounce industrial risk as well.
At present, companies of Ergo group control 18 percent of the Baltic insurance market.
Lietuvos Rytas

Tourism will develop fivefold
Revenues from the tourism sector in Lithuania should amount to 1.9 percent of the gross domestic product (GDP) in 2004, the Global Tourism and Travel Service forecasts. According to this institution, the abovementioned index is to grow more than fivefold in ten years.
Lithuania received LTL 1.735 billion revenues from the incoming tourism in 2003. It is projected that this year these revenues will reach LTL 2 billion.
EUR 311 million have been allocated for improvement of Lithuania’s tourism infrastructure during the years 2004-2006. However, unless Lithuania’s authorities undertake certain means in order to make the country better accessible to foreign travellers, a decline in the tourism sector is possible next year.
The Lithuanian Tourism Department claims that Lithuania lacks high quality railways and road communication is bad due to low-quality Polish roads. Besides, Lithuania should make its mind on cheap flights as soon as possible.
Verslo Zinios

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