Observer "Lietuva"

WEEK 44th 2004

Saturday, 30th of October

Profit of Mazeiku Nafta grows at rapid pace
Lithuania's oil company Mazeikiu Nafta (Mazeikiai Oil), which is controlled by Russia's oil giant YUKOS, posted a consolidated net profit of LTL 448.2 million for the first nine months of 2004, up from a net profit of LTL 117.932 million in the same period last year. Mazeikiu Nafta reported a net profit of LTL 323.242 million for the first half of this year, three times higher than in the first half of 2003.
The oil refinery processed a total of 6.281 million tons of crude and other raw materials during the first nine months of 2004, up by 26.4 percent from 4.969 million tons refined in the same period last year.
Lietuvos Rytas

Jump of Hansabankas profit
Hansabankas, Lithuania's second-biggest bank by assets, announced on Friday a consolidated net profit of LTL 81.6 million for the first nine months of 2004, a rise of 41.2 percent from a net profit of LTL 57.8 million in the same period last year.
Hansabankas, which is a member of Hansabank, the largest financial group in the Baltics, said in a statement that this year's profit growth was largely due to its rapidly expanding loan portfolio.
Hansabankas' loan portfolio increased by LTL 922 million or 34 percent to LTL 3.6 billion during the nine months of this year. Its retail loan portfolio expanded by LTL 418 million or 60.6 percent to LTL 1.1 billion, while corporate loan portfolio rose by LTL 448 million or 25.2 percent to LTL 2.2 billion.
Total deposits at Hansabankas have increased by LTL 672 million or 15.7 percent to LTL 4.97 billion since the start of the year. The bank held a 22 percent share of Lithuania's total loan market and 31.5 percent of total deposits as of late September.
Lietuvos Zinios

New flights
From Sunday, there will be a direct air link from Vilnius to Milan and Munich, while the number of daily flights to London will rise to three. Lithuania's flagship air carrier Lietuvos Avialinijos (Lithuanian Airlines, or LAL) is opening its new winter season on Sunday by launching a new route between Vilnius and Milan and adding more flights to London and Copenhagen. LAL is raising the number of weekly flights on the Vilnius-London route to 14.
Meanwhile, Latvia's national air carrier airBaltic is starting regular scheduled services from Vilnius to London and Munich on the same day, raising to 12 the total number of European destinations it flies to from the Lithuanian capital.
Lietuvos Rytas

Friday, 29th of October

Expenditures by Visa cards increased by 77 percent
Lithuania's tourists ran the expenditures worth USD 24.9 million via settlements with Visa cards in foreign countries last summer. In the June-to-August period, the expenditures of Lithuania's tourists via settlements with Visa cards in 110 countries surged by 77 percent, compared with the summer of 2003, Visa Europe has reported.
Last year, representatives of Visa International said that settlements with Visa cards issued by Lithuanian banks totalled USD 14.07 million in foreign countries in summer of 2003, a rise of 37 percent from the year earlier figure.
Respublika, Verslo Zinios

VP Market targeted at Romania
Lithuania's VP Market, the operator of the largest Baltic retail chain, will open five outlets in Romania in about three months. "We intend to open five discount stores in Romania by end-January. The first store should be opened in mid-December," Julius Numavicius, a co-owner of VP Market and CEO of VP Market operations in Romania, said.
The company was busy coordinating contracts with local suppliers, he said adding, however, that in future the group might consider a possibility to supply Lithuania-made products to Romania's stores. VP Market had acquired commercial premises from Bucharest-based company Practic.
VP Market operates a chain of 277 trade outlets in the Baltic countries, including 187 in Lithuania, 83 in Latvia and 7 in Estonia. The group, which has already established itself as the leading retail chain in Lithuania and Latvia, aspires to enter the top three of Estonia's retailers in 2005.
For this year, the group is projecting the sales of approximately LTL 4 billion.
Lietuvos Rytas, Respublika

Gubernija incurred losses
Hit by cold summer and price war with competitors, brewery Gubernija reported losses of LTL 1.569 million for the first nine months of this year. Company's earnings before interest, tax, depreciation and amortization (EBITDA) totalled LTL 1.91 million in the first three quarters.
Verslo Zinios

Thursday, 28th of October

Stumbras is the leader of vodka market in Lithuania
Lithuanian alcoholic beverage producers held an 82.1 percent share of the local vodka market in terms of sales volumes in the August-to-September period of 2004, up by 2.24 percentage points from June to July, data from AC Nielsen shows.
Stumbras, which is controlled by MG Baltic, was the number-one vodka producer by sales, raising its market share to 36.71 percent in August-September, up by 3.05 points from June-July, according to the data.
Alita ranked second with a 22.59 percent share of the vodka market (up by 1.52 points), followed by Vilniaus Degtine with 16.28 percent (down by 1.45 points), and Anyksciu Vynas, which is controlled by Alita, with 6.52 percent (down by 0.88 points).
Latvijas Balzams, Latvia's biggest distillery, held an 8.71 percent of the Lithuanian vodka market in August-September, down from 9.98 percent in June-July. Estonia's Onistar was sixth with a 2.12 percent share of the Lithuanian vodka market, followed by two other Estonian companies - Liiwi Heliis with 1.32 percent and Ofelia with 1.02 percent.
Lietuvos Rytas, Verlso Zinios

Reorganisation in Alna
Alna, the leading Lithuania's IT group, gears up to establish two subsidiaries Alna Business Solutions and Alna Software, which will take up the business management systems and information system development activities respectively. Moreover, the company's board appointed Justina Gumbiene, who has been working for the company since 1997, as its new chief executive officer. Alna Software will be headed by Arturas Gruodis, currently CEO of Alna's programming center. Tomas Milaknis, currently CEO of Alna, will move to head Alna Business Solutions.
For the first nine months of 2004, Alna reported a turnover of LTL 76.5 million, a rise of 6 percent from the year-earlier figure. Aggregate profits increased by 16 percent, to LTL 25.5 million in the reporting period.
Lietuvos Ryras, Verslo Zinios, Respublika

Gediminas Avenue remains the most expensive shopping address
Gediminas Avenue in Vilnius has remained the most expensive shopping address in the Baltic, the London-based real estate group Cushman & Wakefield Healey & Baker said in its latest study Main Streets Across the World. With the average rent of EUR 761 per square meter per year, Gediminas Avenue in Vilnius climbed to 37th position, from 38th in the last year ranking.
Viru Street in Tallinn ranked 44th, while Krasta Street in Riga was 45th on the list. The average rent per square meter on Gediminas Avenue exceeds the rent at Viru Street by 53 percent, and outstrips the rent at Krasta Street by 2.1 times.
Lietuvos Rytas

Wednesday, 27th of October

Used tires will turn into cement
Akmenes Cementas, Lithuania's only cement manufacturer, is planning to recycle up to 10,000 tons of used tires next year after winning a tender of the country's Environment Ministry.
"This is a new area of operation for us but we have been considering the possibility of collecting and processing tires for several years now," Edmundas Montvila, production director at Akmenes Cementas, said.
"We will use tires to produce clinker, a component of cement, which is mixed with gypsum to produce cement," he said.
The company has until now produced clinker from limestone and clay. It will use both production methods in the future. Akmenes Cementas is planning to start recycling used tires in May or June next year.
The Environment Ministry chose Akmenes Cementas as the winner of its tender for the collection and recycling of used tires on Monday. The cement producer beat four other Lithuanian companies and consortia since the company offered the lowest price for tire recycling, LTL 94.4 per ton. Lietuvos Rytas, Lietuvos Zinios, Verslo Zinios

RST works profitably
Rytu Skirstomieji Tinklai (RST), the state-run operator of eastern part of the Lithuanian power grid, reported unaudited pre-tax earnings of LTL 19.1 million for the first nine months of 2004, a rise of 23.2 percent from the year earlier figure. However, the performance figure had been calculated without considering the reappraisal of company's long-term tangible assets, the company reported via the Vilnius' Securities Exchange (VSE).
For the first half of 2004, the company posted unaudited pre-tax earnings of LTL 12.9 million, an increase of 3.2 percent on a twelve-month basis. For 2004, the power grid operator is projecting a pre-tax profit of LTL 24 million, a decline of 0.3 percent from the year-earlier figure. Operating revenues should reach LTL 737.9 million.
Lietuvos Zinios, Verslo Zinios, Respublika

More flights – more profit
Vilnius international airport, the biggest Lithuania's hub, reported some LTL 15 million in pre-tax earnings for the January-to-September period, a rise of 25 percent from the year earlier figure.
"Earnings increased on the back of significant rise in the number of flights and passenger flow. However, we cannot make any specific predictions for November and December," Mindaugas Ivanauskas, Vilnius airport CEO, said.
However, he noted that the airport expected to service over 900,000 passengers this year, a rise of about one-fourth from the last year's flow of 719,850 passengers.
In the first nine months of 2004, Vilnius airport serviced 753,800 passengers, a surge of 37.4 percent from the January-to-September period last year.
Lietuvos Zinios

Tuesday, 26th of October

Borrowing boom in Lithuanian banks
The aggregate retail loan portfolio of Lithuania's commercial banks surged almost twofold in a year to the end of September. The combined amount of retail loans issued in twelve months to October 1 surged almost twofold or by LTL 1.913 billion, year-on-year, to LTL 3.859 billion, the Bank of Lithuania has announced. The aggregate portfolio of housing loans alone soared 91 percent, or LTL 1.417 billion, to LTL 2.971 billion in the reporting period.
Hansabankas ranked number-one on the domestic housing loan market with the portfolio of LTL 837 million as of October 1. Vilniaus Bankas was the second with the portfolio of LTL 631 million, however, if combined with the mortgage arm VB Mortgage Bank, the bank's housing loan portfolio hit LTL 901 million. Nord/LB Lietuva reported the housing loan portfolio of LTL 621 million, Sampo – LTL 394 million, and the Lithuanian branch of Nordea Bank Finland – LTL 121 million. Other banks accounted for mere 3.3 percent of overall housing loan market.
The aggregate banking loan portfolio stood at LTL 15.31 billion as of early October, an increase of 50.1 percent or LTL 5.108 billion from the year-earlier figure.
In the third quarter alone, the portfolio of loans extended to private customers increased by 8.4 percent, or LTL 1.19 billion, while the combined amount of loans issued to financial institutions rose by 8.8 percent, or LTL 145 million.
Lietuvos Zinios, Verslo Zinios, Lietuvos Rytas

Lithuanian leasing market soared by one third
The aggregate leasing portfolio of 12 companies, which are the members of the Lithuanian Leasing Association reached LTL 3.516 billion at the end of September, rising by 30.4 percent or LTL 819 million since the start of the year. The combined leasing portfolio surged by 51.9 percent, compared with the year earlier figure of LTL 2.315 billion. The amount of financing under new contracts that were concluded from the start of this year rose to LTL 2.315 billion, whereas the combined value of new contracts surged by 43.6 percent, year-on-year, to LTL 1.938 billion.
Market players attributed the rise to rather low interest rates, an improvement in the quality of services offered by leasing operators, a rise in demand in assets and consumer goods, and a marked increase in investments into manufacturing sector.
Verslo Zinios

Profit of Snoras grows
Snoras, the fourth largest commercial bank in Lithuania by assets, reported its net profits in the first nine months of 2004 amounted to LTL 14.8 million, 2.4 times higher than the figure in January-September of 2003, when the bank's profit was LTL 6.2 million. On August 1, Snoras possessed assets worth LTL 2.02 billion. The commercial bank earned net profits of LTL 11.8 million in the first seven months of 2004.
Lietuvos Zinios, Respublika

Monday, 25th of October

Lithuania’s economic growth is the fastest in EU
The International Monetary Fund (IMF) sticks to its forecast that Lithuania will be the fastest-growing economy in the enlarged European Union in 2004 and 2005 and has further raised its GDP growth projections for this country. The IMF forecasts in its latest World Economic Outlook that Lithuania's GDP will grow by 7 percent in 2004 and rise as much in 2005. Earlier this year, the Fund predicted that the country's GDP growth rates for the respective years would be 6.7 percent and 6.3 percent.
The IMF forecasts 0.6 percent inflation in Lithuania in 2004, the lowest among the new EU member states and second lowest in the entire EU. Next year, inflation in Lithuania is expected to rise to 2.5 percent. But it pointed out that current account deficits in the countries were very high and warned of potential risks of overheating. Lithuania's current account deficit is forecast to reach 7.1 of GDP in 2004 and to narrow somewhat to 6.9 percent in 2005. According to revised data, the country's GDP grew by 9.7 percent in 2003, the highest growth rate in the EU.
Lietuvos Zinios, Respublika, Verslo Zinios

SAS starts flights from Palanga
Scandinavia's air giant SAS will launch flights from Lithuania's Baltic resort of Palanga.
SAS will launch the Palanga-Copenhagen route on November 1.
Swedish Swedline and Kaunas-established Aviakompanija Lietuva (Air Lithuania) are the only two carriers to use the Palanga airport all year round. The companies offer flights to Bilund, Denmark, Stockholm, Malme, Oslo and Hamburg.
Meanwhile, Lithuania's flagship carrier Lietuvos Avialinijos (Lithuanian Airlines, or LAL) puts flights from Palanga to Frankfurt, Berlin, Hanover and Cologne on its summer schedule only.
International Palanga airport, the regional Western Lithuania's airport, has been adapted to service YK, Boeing, Saab, Jetstream and ATR planes. The airport raises the passenger flow steadily by some 10-15 percent each year. The number of passengers increased by 40 percent to 57,000 in the nine months of this year. In 2004, Palanga airport sprang up to rank number-two in terms of passenger flow in the country.
Respublika, Verslo Zinios

Advertisement market increases
Advertising volumes increased across all media in Lithuania in the first nine months of 2004, but the highest growth rates were recorded for television and outdoor advertising, according to data of TNS Gallup. Total advertising volumes on TV channels broadcasting in Lithuania showed a 25.4 percent increase over nine months of 2004 year-on-year. Advertising time on local radio stations increased by 5 percent, year-on-year, to 1.632 million seconds.
Advertising space in the press expanded by 8.4 percent year-on-year. Newspaper advertising rose by 6.8 percent, while magazine advertising was up 15.5 percent.
Verslo Zinios

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