Observer "Lietuva"

WEEK 35th

Saturday, 28th of August

30 percent rise in visitors’ number reported by accommodation providers
Lithuania's accommodation providers reported a 30.3 percent rise in guest flow in the first half of 2004, with a total of 448,000 guests, 52 percent of whom were foreigners, staying at domestic hotels, guest houses, motels, holiday homes and health centres.
A total of 309,600 guests stayed at hotels and guest houses in the first half of 2004, a rise of 38.8 percent, in year-on-year terms, the country's Statistics Department reported citing preliminary data. Guests at holiday homes numbered 40,800, health centres - 49,300 visitors.
The number of guests from abroad at domestic hotels surged by 36.8 percent, on year-on-year basis.
The occupancy rate at Lithuania's hotels and guest houses made up 32.5 percent in the first half of 2004, up from 30.5 percent in the respective period last year. Occupancy at Vilnius' hotels, meanwhile, slipped to 40.7 percent, from 41.1 percent, in the reporting period.
Kauno Diena, Lietuvos Zinios

Revenues of Elmenhorster up by one-tenth
Elmenhorster Vilnius, foreign equity Lithuania's juice producer, reported sales of LTL 17 million for the first seven months of 2004, a rise of 9 percent from the year-earlier figure of LTL 15.4 million.
Petras Kraujalis, company's CEO, said the company, which had 48 products in its output range, controlled about 40 percent of domestic juice market and 23-25 percent of the juice and lemonade market.
Sales on domestic market comprise about 80 percent of total output, while the remaining products are shipped both to the West and the East. In August the company launched the production of two brands of energy drinks, which are exported to the European Union (EU) markets.
Lietuvos Zinios

Fans of Olympic Games boosted turnover of Svyturys beer
Fans watching the summer Athens Olympics, especially those cheering on the Lithuanian national basketball team, have increased the beer sales of Svyturys-Utenos Alus.
"During the weekend when the Lithuanian national team played against the US team, sales of Svyturys Utenos Alus jumped 34 percent. Even bigger sales are expected these days," said Mindaugas Sestokas, the marketing head of Svyturys Utenos Alus.
Svyturys is a long-time supporter of the Lithuanian men's national basketball team. Over five years the brewery has donated over LTL 1 million to the Lithuanian basketball team. The company supports not only the men's national basketball team, but also the entire Lithuanian Olympic delegation participating in the Athens Olympic Games.
Ten percent of the country's beer market is taken up by Svyturys Ekstra beer. Over the course of a summer, the brewery sells an average of 2.5-3 million litres of the brand.
Svyturys Utenos Alus sold 3.591 million dekalitres of beer and controlled 24.35 percent of the beer market during the first seven months of this year.
Kalnapilis-Vilniaus Tauras was in second place, selling 3.591 million dekalitres of beer during this period. The company had 24.35 percent of the beer market compared to 23.19 percent in the corresponding period of the previous year.
Kauno Diena, Lietuvos Zinios

Friday, 27th of August

Electricity tariffs will grow
Prices of electricity transmission and distribution will rise in Lithuania in 2005 in line with the new electricity price methodology approved by the State Control Commission for Prices and Energy on Thursday.
The new methodology for the calculation of prices of electricity and ceilings thereof will offer a chance to raise the tariffs for Lietuvos Energija (Lithuanian Energy), the domestic power utility, Vakaru Skirstomieji Tinklai (VST) and Rytu Skirstomieji Tinklai (RST), the two power grid operators.
Following the new methodology, the earnings of electricity transmission and distribution companies would be estimated on the basis of value of assets used for those operations instead of costs, which were used in the previous methodology.
The new tariffs will have to be ratified and announced until the end of November, one month left till their introduction.
Lietuvos Rytas, Verslo Zinios, Lietuvos Zinios

Internet usage
A poll carried out by the market researcher TNS Gallup by the order of Lietuvos Telekomas revealed that 24 percent of Lithuania’s residents used internet once per week in May-June 2004. The CEO of Lietuvos Telekomas Arunas Siksta claims that it is very difficult to raise the number of internet users without state support. In his opinion, even reduced internet access tariffs would not attract as many users as a possibility to find phone numbers of officials or use certain municipal services online.
Lithuanian residents avoid conducting financial operations online. Meanwhile 70 percent of companies use internet for financial payments.
Only 3.4 percent of Lithuanians use internet telephony services.
Relying on the research data, 59 percent of Lithuania’s companies have at least one computer, and only half of them have an internet access. 44 percent of Lithuanian companies have not invested in ITT over the last year. 45 percent of companies invested up to LTL 10,000 in ITT, while 56 percent plan to invest this sum in near future.
AB Lietuvos Telekomas claims that it controls 47 percent of the internet market in Lithuania at present.
Respublika, Lietuvos Rytas

Monthly gross earnings up by 5 percent
Average monthly gross earnings in the Lithuanian economy, apart from sole proprietorships, rose by 5 percent in the second quarter of 2004, in year-on-year terms, and reached LTL 1,222, the Statistics Department has reported.
Average monthly gross earnings in the public sector grew by 6.3 percent, year-on-year, to LTL 1,269, while average earnings in the private sector went up by 4.2 percent to LTL 1,186.
Monthly wages of manual workers averaged LTL 890 in the second quarter, up by 5.7 percent year-on-year. Non-manual workers earned LTL 1,526 on average, a rise of 4.9 percent.
Verslo Zinios, Lietuvos Zinios

Thursday, 26th of August

Leap of mobile communications penetration
The mobile service market of Lithuania has been growing rapidly. The penetration of mobile services reached 79 percent at the end of June 2004, according to the Communications Regulatory Authority (CRA). Early this year, the figure amounted to 63 percent.
The mobile operators, though, affirm that the actual number of mobile service users is significantly smaller, since during special offers some customers use the services of several companies at a time.
"In light of the varying methodologies of the operators, the number of users announced could be correct. But the actual penetration level is significantly lower, at some 65 percent," Pranas Kuisys, the commerce director of Tele2, said.
Omnitel, the number-one mobile service provider in Lithuania, reported that at the end of the first half of the year the nation's mobile service penetration stood at 70 percent and should grow to 80 percent at the close of the year.
Omnitel's market survey results show that at least 11 percent of domestic mobile service users hold more than two SIM cards. Figures about the penetration level may therefore not be accurate.
At the end of June, Omnitel announced it had 1.14 million subscribers, and Bite GSM said it had 739,000 clients. The number of Tele2 clients exceeds 800,000.
Lietuvos Zinios, Verslo Zinios, Respublika, Lietuvos Rytas, Kauno Diena

Danish Brewery Group, the owner of the second largest Lithuania's brewer Kalnapilis-Tauras Group, reported sales of DKK 109.1 million (LTL 50.6 million) in Lithuania and Poland for the first half of 2004, a decline of 7.3 percent from the sales in the January-to-June period a year ago.

Vilniaus Bankas handed over technical maintenance to Sonex
Starting September 1, UAB Sonex Kompiuteriai will be serving users of VB Telebankas (VB Tele-bank) and VB Korteles (VB Cards) of Vilniaus Bankas (VB). Vygintas Leipus, VB IT coordinator, says renouncement of non-banking activities will enable the bank to provide higher quality services to its clients.
Sonex Kompiuteriai has established a Customer Care Department for serving the bank’s clients. The company will be supervising and upgrading the hardware and software of VB Telebankas and VB Korteles.
VB has already handed over the maintenance of ATMs and security services to UAB Falck Security, management of problematic credits – to UAB Zvilgsnis Is Arciau.
UAB Mokejimo Korteliu Sistemos (Payment Card Systems) maintains electronic card scanners of the bank.
Verslo Zinios

Ragutis will ride cider horse
Kaunas-based brewery Ragutis will strive to retain the third position in the beer market and to keep controlling nearly 50 percent of the cider market of the country.
Ragutis does not forecast leap in sales and plans to focus on its most successful products – cider and alcohol cocktails.
Vytautas Meistas, CEO of Ragutis, says their goal is to develop as much as the beer market develops. He says the company has boosted sales of cider and alcohol cocktails this yea but the market is growing rapidly as well. According to Meistas, Ragutis controls 50 percent of the cider market and 20 percent of the alcohol cocktail market in Lithuania.
The Lithuanian Brewers’ Association reports that Ragutis occupied 10.2 percent of the beer market in the first 7 months of this year.
Lietuvos Zinios

Wednesday, 25th of August

Gas stations will turn into fast food restaurants
Statoil, one of the leading gas station chains in the Baltic region, has begun upgrading its stores in accordance with a new conception. The redesigned stores of the Norwegian company will offer fast food.
Statoil has opened three stores at gas stations in Lithuania tailored to the new conception: two facilities in Vilnius and one station in the seaside resort of Palanga.
The foreign company says the reform was undertaken after a survey of customer needs.
Daiva Joksiene, the retail trade director at the local subsidiary Lietuva Statoil, revealed that the upgrading of the stores would be extended to the delivery of food to drivers. While a driver buys fuel, his food will be heated up and then delivered to his car.
Statoil, according to its officials, will be surveying the feedback of customers to its new service conception until October 2004, before continuing with the reform. If the responses are positive, until the end of 2005 the company will upgrade stores in the remaining gas stations.
It is estimated that the LTL 200,000 investment into the sale of fast food will help raise such sales around 30 percent.
Lietuvos Rytas

Baltikums Draudimas might be sold
The Latvian financial group Baltikums may sell Baltikums Draudimas, a Lithuanian non-life insurance company, to a strategic investor.
"The shareholders have decided to seek a strategic investor," Albertas Dvarzeckis, CEO of Baltikums Draudimas, said.
"It is possible that a majority stake in Baltikums Draudimas will remain in the hands of the current owners, but selling the shares to a strategic investor, while retaining a blocking stake of 25 percent, is being considered as an option as well," he said.
Dvarzeckis added that Baltikums expects to find a strategic investor for the fast-growing Lithuanian insurance company in the first quarter of 2005.
Baltikums Draudimas has an authorized capital of LTL 9.606 million. The Latvian financial group holds around 98 percent of the stock.
Verslo Zinios, Lietuvos Rytas, Respublika

Snaige launches production of different brand fridges
Lithuania's Snaige, the largest manufacturer of refrigerators in the Baltic countries, has launched the production of refrigerators with Russia's Polar brand at its Kaliningrad plant in August. Moreover, the company expects to kick off the manufacturing of fridges with a German brand in early 2005.
Giedrius Barysas, Snaige CEO, praised the profitability of Snaige's plant in Kaliningrad: "Profitability of Kaliningrad plant exceeds that of Alytus plant more than twofold. However, the result of 2004 will be weighed down somewhat by comparatively insignificant losses incurred through the construction of Kaliningrad plant."
Snaige cherishes plans to build another plant in Russia, which would manufacture electric and gas cookers with Snaige brand. The project with the approximate value of LTL 100 million could be implemented in a year or a year and a half.
Snaige reported pre-tax earnings of LTL 23,917 million for the January-to-July period of 2004, a rise of 33.6 percent from the year-ago figure. The company's sales grew by 17 percent, year-on-year, to LTL 185.76 million.
Lietuvos Rytas, Verslo Zinios, Lietuvos Zinios

Tuesday, 24th of August

Insurers’ profit has shrunk
In the first half of this year, combined pre-audited profits of all Lithuanian insurance companies amounted to LTL 7.7 million, a drop of 38 percent compared to the corresponding period in 2003.
Profits were earned by 9 of 19 non-life insurers and 4 of 9 life insurance companies, the national insurance monitoring authority said on Monday.
The profit earned by non-life insurance companies equalled LTL 3.3 million. In the first half of 2003, the companies earned LTL 8 million.
The profit made by life insurers though was higher, at LTL 4.4 million, just a little bit lower than during the same period in 2003 (LTL 4.5 million).
Verslo Zinios, Lietuvos Rytas

Export boosts sales of Panevezio Stiklas
Lithuania's glass producer Panevezio Stiklas (Panevezys Glass or PS) boosted its sales by 10 percent in 7 months of this year and posted LTL 654,000 profit for the given period.
PS exports some 60 percent of its production; most of it is exported to the West and the retrieved Eastern market. Following the agreement, it is planned to export bottles worth EUR 0.7 million to Moscow this year. The company has concluded an agreement with Ukraine on a monthly bottle export worth LTL 1.6 million.
It is projected that the glass producer will post LTL 1.9 million profit for this year at LTL 70.4 million turnover, i.e. 30.6 percent rise year-on-year. The company incurred LTL 4.8 million loss last year.
Verslo Zinios, Lietuvos Zinios

Kaunas-based company will register internet domains
Kaunas-based IT company UAB Elektronines Reklamos Centras (Electronic Advertising Centre or ERC) has acquired a right to register the international domains in Lithuania. So far, this could be done only through the foreign companies and registration of a domain used to take a long time due to organizational reasons and payment problems.
The system installed by ERC will enable clients not only to register internet domains but to administrate them online as well. ERC will provide consultation and maintenance services to the clients.
Dmitrijus Bozenovas, deputy director of Kaunas-based company UAB Elektronines Informacijos Centras (Electronic Information Centre), says the Lithuanian domains are much more popular in the country. EIC has created some 60-70 websites and internet portals and only two of them had the ending “.com”.
ERC hopes to provide these services in the international market as well. The turnover of ERC amounted to LTL 0.6 million last year. It is projected that the turnover will increase to LTL 0.9-1 million this year.
Verslo Zinios

Monday, 23rd of August

Growth of prepaid card sector is not related to scandals
Lithuania’s mobile communications operators have been selling more prepaid payment cards this year, however, they deny that the sales have been preconditioned by the recent call tapping and corruption scandal.
Vanda Nekrasiene, a spokeswoman of Omnitel, told Respublika that the sales of the operator’s prepaid cards have increased 40 percent since the start of the year. According to her, this is related to attractive offers of the company for the clients rather than the scandals. A poll carried out in June revealed that only 7 percent of clients purchased prepaid cards for the purpose of confidentiality. 64 percent of the polled said they wanted thus to control their expenses, while 60 percent of respondents said they did not like paying taxes regularly.
Representatives of Bite GSM and Tele2 also deny the relation between the scandal and the rise of prepaid card sales.
Omnitel reports that less than a half of its 1.14 million subscribers use prepaid service cards. Bite claims that prepaid card users account for 50 percent of the company’s clients, while Tele2 reports that it controls nearly 40 percent of the prepaid card market.

Danisco Sugar takes millions out of Lithuania
The Danish company Danisco Sugar has decided to pay nearly LTL 37 million in dividends to the shareholders of Panevezys and Kedainiai-based sugar factories. It is presumed that the investor takes the money back because it projects bad future of the sugar industry in Lithuania.
Few days ago, Danisco Sugar reported that its Panevezys-based sugar factory netted LTL 17.8 million profit, while the Kedainiai-based factory incurred LTL 877,000 loss. Shareholders of both companies will be paid LTL 20 million and LTL 3.3 million dividends respectively.
The authorized capital of Danisco Sugar will be reduced by LTL 13.4 million that will also be paid to shareholders. Danisco Sugar controls a 67 percent stake in the Panevezys-based factory and a 73.57 percent stake in the Kedainiai-based factory.
Verslo Zinios

Businesspeople of the country discover building maintenance business
Business in Lithuania has been developing at a rapid pace lately. Demand for offices induces development of a new business – building maintenance – which has been gaining popularity lately. Statistics shows that popularity of this service is to grow in future.
A building adapted for the needs of modern business is huge and complicated property, maintenance and administration of which is not easy. In 1999, Lithuanian companies presented a new service – premise management, which guarantees functionality of the building systems and relevant operation of engineering equipment.
Experts claim that the premise management service is topical to all the real estate owners, as it enables them to focus on their main activity and to leave problems related to building maintenance to specialists.
Big financial companies, such as Vilniaus Bankas, Hansabankas and Nord/LB Lietuva, grew interested in the premise management service. Rubikon Apskaitos Sistemos (Rubikon Accounting Systems) provide the premise management service to the abovementioned companies as well as the real estate company Hanner Property and the telecommunications operator Lietuvos Telekomas and many other clients. The general area of the premises maintained by Rubikon Apskaitos Sistemos constitutes 2.7 million square metres.

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