||WEEK 4th. 2004
Saturday, 24th of January
Agreement on the sale of Lithuanian Gas finally signed
Representatives of Russia's natural gas giant Gazprom and Lithuania's State Property Fund (SPF) signed an agreement on purchase and sale of a 34 percent stake in Lietuvos Dujos (Lithuanian Gas), the natural gas utility, for LTL 100 million, ending the year-and-a-half period of negotiations.
The agreement will need the approval of Lithuania's government to come into effect.
The deal is expected to be finalized in February, when Lietuvos Dujos and Gazprom should complete the talks and sign an agreement over the supply of natural gas until 2015. Moreover, Gazprom should also get relevant permits from Russia's central bank and Lithuania's competition regulators, sign the shareholders' agreement and the gas supply contract, a deed of transfer and acceptance of shares and settle the payment for the holding in Lithuanian gas utility.
According to the new gas supply agreement, which will come into effect in July, Gazprom will offer to Lietuvos Dujos the direct supply of 70 percent of gas demand on Lithuania's market (excluding the Achema fertilizer producer and Kaunas CHP), raising the share of gas utility on domestic market to 70 percent from some 28 percent.
Gazprom might also pursue purchase of stake in private equity company Dujotekana, currently the largest Lithuania's gas importer.
(Respublika, Lietuvos Rytas, Lietuvos Zinios)
Producer of unique beverages are disappointed
New edition of the Excise Tax Law might wreck Lietuvos Midus, Lithuanian producer of unique alcoholic beverages.
Valentas Semenas, head of the company, is extremely upset about the fact that although the EU regulations allow countries to apply lower excise tariffs for producers of the national beverages, Lithuania is not willing to take advantage of this. According to the preliminary calculations, the price of the most popular mead balsam would increase by LTL 6-7, while prices of other beverages should increase significantly as well. Semenas says the company would not be able to offer competitive prices if the government does not take any measures. According to Semenas, the company will probably go bankrupt if the new edition of the Excise Tax Law is approved as it looks now.
The company uses honey, fruit, berries and herbs for production of beverages. Their recipes are kept secret and are know only by Semenas and his wife, who works as a production manager at Lietuvos Midus.
Gasoline prices go up in Lithuania
Lithuanian fuel retailers raised gasoline prices by around LTL 0.04 per litre on Friday, tracking a rise in wholesale oil product prices, while diesel fuel prices remained unchanged.
The price of A95 gasoline, the most popular brand in Lithuania, ranged between LTL 2.41 and LTL 2.49 per litre in Vilnius' filling stations on Friday, while diesel fuel prices were between LTL 2.28 and LTL 2.34 per litre. Unmanned stations were selling fuel at the lowest prices.
The wholesale price for Mazeikiu Nafta's A95 gasoline was LTL 2.04 per litre on Friday, up by LTL 0.07 since the start of this year. The price for diesel fuel has gone up by LTL 0.01 to LTL 1.89 per litre.
Friday, 23rd of January
Lithuania will protect its market from cheap pork
The Lithuanian Agriculture Ministry proposes to apply a 30 percent duty on Polish pork imports, but not lower than LTL 1.48 per kilogram, in an effort to protect the domestic market from cheaper imports from the neighbouring country.
The measure, if approved, will be effective until Lithuania's EU accession. Lithuania, as well as Poland, expects to join the European Union on May 1, 2004.
Lithuanian authorities have released data showing that pork imports from Poland have been rising at a fast rate recently.
According to data from the Lithuanian Customs Department, the average declared price of pork imported from Poland is LTL 2.86 per kilogram.
The Lithuanian Association of Pig Producers has said prices for pork produced in Lithuania range between LTL 4.01 and LTL 4.6 per kilogram.
Chief executive of Ragutis steps down
Audrius Miksys is stepping down as chief executive of Ragutis, the Lithuanian beer producer that is majority owned by the Estonian brewery A.Le Coq, sources have said.
Miksys, has neither confirmed nor denied this information. He has headed Ragutis, which is based in Lithuania's second-biggest city of Kaunas, since 1999.
According to information available to BNS, Miksys' job contract with Finland's Olvi expired last year.
There is speculation in the market that one of the key reasons behind Miksys' reported resignation is Ragutis' poor performance results.
The brewery has operated in the red since 1999, despite rising revenues.
Kaunas furniture makers turn from East to West
Kauno Baldai is one of the most rapidly growing furniture manufacturers in the country. The company has invested a lot into new technologies over the past few years and started exporting more of its production to the West instead of the East. Kauno Baldai is part of the SBA furniture group.
The main export partner of the company is the Swedish concern Ikea. The company also exports to Finland, Norway, Benelux countries and Germany.
Turnover of the company was LTL 43.6 million last year, which is a significant increase from LTL 36.3 million in 2002.
Zydrunas Martusevicius, CEO of Kauno Baldai, says the main problem for the company is the lack of qualified workers. He says the company hires employees and train them afterwards to increase their qualification.
Thursday, 22nd of January
Lithuanian economy will grow rapidly this year as well
Analysts of Nord/LB Lietuva predict Lithuanian economy to grow by 6.8 percent this year and by 6.5 percent in 2005. Other financial institutions forecast a similar growth rate.
Vadimas Titarenko, president’s adviser at Nord/LB Lietuva, says the bank forecasted 7.6 percent economy growth in 2003. He admits now that the growth will be even more rapid.
Titarenko predicts economic growth will be observed in the Lithuania’s periphery this year too. According to Titarenko, the structural funds of the European Union should play an important part here.
Nord/LB Lietuva predicts the inflation of 1.6 percent this year. The bank, as well as Vilniaus Bankas, expects the salary to grow this year. Analysts of Vilniaus Bankas have earlier predicted that the average salary will grow by 9 percent in 2004-2005.
Hansabankas predicts Lithuanian GDP to grow 6.9 percent this year, while inflation should stand at 1.8 percent.
Lithuanian payment card market is full
The market of payment cards issued by Lithuanian banks showed the slowest growth last year and, according to the representatives of the banks, is saturated.
The number of payment cards issued by ten banks grew by 44.2 percent last year up to 2.307 million, while their total turnover reached LTL 11.294 billion 50.2 percent larger than in 2002.
"I think de facto, the market is saturated and formed, which allows saying that we are already Europeans," Vitalijus Rancevas, director of the Payment Cards Department in Hansabankas said. According to Rancevas, people now have to be taught to pay with their card instead of just taking cash from an ATM.
The biggest market news in 2003 was the replacement of magnetic cards with the safer chip cards. Besides Hansabankas, Vilniaus Bankas, Nord/LB Lietuva, Snoras and ?kio Bankas will launch chip cards this year.
Vitalijus Rancevas predicts that microchip cards will account for 40 percent of all cards at the end of the year.
(Respublika, Lietuvos Zinios, Lietuvos Rytas)
Nord/LB Lietuva reports LTL 16.05 million profit for 2003
Lithuania’s third largest bank Nord/LB Lietuva reported net profit of LTL 16.05 million for 2003. The bank had a loss of LTL 50.6 million in 2002 due to specific provisions.
Thomas Buerkle, president of the bank, said the results are very good, as the bank managed to work profitably in the process of reorganization. He added that the bank would emphasize service quality, supply of products and profitability this year.
President of Nord/LB Lietuva admitted the possibility that Nord/LB Draudimas, insurance branch of the bank, will be sold.
Bank of Lithuania reported last week that 10 Lithuanian banks and 1 branch of a foreign bank operated profitably last year.
Vilniaus Bankas led all the banks with LTL 132.3 million profit, while Hansabankas followed with LTL 61.043 million.
(Verslo Zinios, Respublika)
Wednesday, 21st of January
Marketing brought up a new leader
UAB Justluka has become one of the largest furniture manufacturers in Northern Lithuania over the past few years. Executives of the company say good contacts with retailers and wide assortment are the two keys to success.
Azuolas Petrikas, owner and chief executive of Justluka, says the company has 25-28 sets of different soft furniture on offer. The designers of the company constantly update the sets.
UAB Justluka is taking full advantage of the marketing possibilities available in Lithuania. Furniture sets of the company won Product of the Year awards in 2002 and 2003. Petrikas notes that the award attracts customers like a magnet. The award has boosted the sales of the award-winning set 10 times.
The company currently employs 116 people. It plans further expansion this year. Justluka will build new storage and production premises. A new sales centre should be opened in Siauliai as well.
Turnover of Norfos Mazmena totals LTL 673 million
Lithuania's Norfos Mazmena group, the operator of the fourth-largest retail network, reported sales of LTL 673 million for the full year 2003.
"The sales rose amid opening of new stores, an increase in purchasing power and greater attractiveness of our outlets. We will pursue further expansion this year, and intend to open 25 stores in regional centres. The sales should rise by some 30 percent this year," Audrius Pocevicius, Norfos Mazmena CEO said.
Pursuant to the data of the Competition Council, the turnover of retail outlets of Norfos Mazmena reached LTL 350 million, raking in some 4.2 percent of Lithuania's retail trade market to the chain.
Lithuania will fight with Latvia and Estonia for the Finns
Lithuanian Department of Tourism set an ambitious goal to compete with Latvia and Estonia in attracting Finnish tourists to Lithuania. The tourism information centre recently opened in Helsinki should serve the cause.
Lithuanian tour operators started paying more attention to the Finnish market as well. Lithuanians took an active part at Matka 2004 tourism exhibition held in Helsinki, where the number of Lithuanian companies significantly exceeded representatives of Latvia and Poland.
Alvitis Lukosevicius, head of the Tourism Department, says 50,000 Finnish tourists visited Lithuania last year. He admits it would be hard to catch up with the Estonians but it is possible to compete with Latvia for the Finns.
Lithuanians held talks with the Finnish low-fare airline Soder Airlines, which intends to start regular flights to Lithuania in May. It should make travelling to Lithuania easier for the Finnish tourists.
Lithuania plans to put emphasis on entertainment, nightlife and casinos in attracting the tourists.
Tuesday, 20th of January
Industry sales grew last year
Lithuanian industrial sales rose by 13.8 percent in the full year 2003, compared with 2002. Excluding petroleum products, the growth rate was 16.1 percent, the country's Statistics Department has reported.
In December, compared with December 2002, industrial sales surged by 15.8 percent, or 21.2 percent, with petroleum products excluded.
Sales of metals, except machinery and equipment, rose by 8.6 percent, while sales of chemical products increased by 5.9 percent over the month. Meanwhile, the sales of textiles plunged 19.9 percent, leather and leather products - 15.1 percent, machinery and equipment - 14.8 percent, and refined oil products - 1.4 percent.
The total volume of livestock and poultry (live weight) bought from farms increased by 28.2 percent, while raw milk purchase volumes went up by 7.4 percent over the year.
Aviakompanija Lietuva attracts 13 potential buyers
13 potential buyers have purchased privatisation tender documents of Aviakompanija Lietuva (Airline Lietuva), the subsidiary of Lithuanian Airlines. There are 11 Lithuanian and 2 foreign subjects among the potential buyers. Scandinavian Airlines, which was thought to be one of the most-likely buyers of the Lithuanian air company, is not among the potential buyers.
The starting price of the 100 percent share package is set at LTL 715,000. Experts predict the company will be sold, although its price will not rise much.
Aviakompanija Lietuva flies from Kaunas and Palanga to Malmo, Bilund, Hamburg and Oslo. The sales of the company amounted to LTL 29.5 million in 2003, while its profit or loss is still being calculated. The company has debts reaching LTL 20 million.
Lithuanian paper market is still growing
UAB Lukas, Lithuanian paper selling company, reported turnover of LTL 17.5 million for 2003, which is a decline from LTL 20.5 million in 2002. The company claims the turnover is down due to the declining export. Sales in the local market grew by 10 percent.
Arvydas Matulaitis, sales and marketing manager at UAB Lukas, expects the sales of the company to grow by a further 10 percent this year, while the whole paper market in Lithuania should grow by 5-10 percent. Matulaitis says the paper market is growing every year in Lithuania, as new companies constantly start business.
According to Matulaitis, an average of 35 kilograms of paper fall to every Lithuanian per year, while the mark is 188 kilograms in the European Union and 330 kilograms in the United States. Thus, the paper market should continue growing in the country.
Monday, 19th of January
VAT provided more clients for leasing companies
Amendments to the VAT law led to the increased flow of clients for the Lithuanian leasing companies.
Verute Vitkeviciene, head of Siauliu Banko Lizingas, says January and February usually are the months of a slowdown. However, the volume of clients has doubled early this year compared to January in 2003. The main reason for the increase is the amendments to the VAT law that should make leasing services more expensive as of February 1. According to Vitkeviciene, if a purchase of LTL 20,000 is made, the price of leasing services will increase by LTL 200.
UAB Hanza Lizingas counts that if the value of leased property is LTL 59,000, the leasing term is 5 years, the initial deposit is 15 percent and the annual interest is set at 6 percent, the interest paid by a client will increase from the current LTL 6.750 to LTL 8,000 after the amendments to the VAT law come into power.
Malsena failed to reach target profit
Lithuania’s leading mill AB Malsena increased its exports by 6 percent last year compared to 2002, while its revenues grew by 40 percent. However, the target profit was not reached due to rising raw material prices.
AB Malsena initially planed to earn LTL 3 million but managed to reach only the mark of LTL 2.2 million.
Mindaugas Gedvilas says the significant increase of revenues was mainly due to the export of grain and sales of rye flour. AB Malsena exported its flour to Kaliningrad and Moldova, while grain was exported to Ukraine and Romania.
AB Malsena finished the renovation of Vievis mill last year and signed a long-term flour supply agreement with Fazer. The company invested a total of LTL 13 million in 2003. The company expects to enter the European Union market this year.
Ekranas plans growth for 2004
Lithuania's colour picture tube manufacturer Ekranas plans to post net profit of at least LTL 25 million. If the situation in the market is favourable for the company, Ekranas expects its profit to reach LTL 35 million.
Ekranas targets the turnover of LTL 560 million this year, which would be an increase of 20.4 percent compared to LTL 465 million in 2003.
Angelija Zokaitiene, spokesperson for Ekranas, says the company expects revenues to grow from the sales of small and medium-size TV tubes. Ekranas does not plan on entering the market of modern TV-tubes yet.
Ekranas will manufacture 4.5-5.1 million TV-tubes this year with at least 1 million of them being 15” TV-tubes.
According to Zokaitiene, there is a huge demand for small and medium-size TV-tubes in Europe. Ekranas and Philips are currently the only companies supplying such products to the market.
Baltic Weekly MonitorA