Observer "Lietuva"

WEEK 46th 2004

Saturday, 13th of November

Stikliai popularizes its name
Vilnius' five-star hotel Stikliai has joined the Spanish hotel network Hotusa. This network encompasses over 1,400 hotels worldwide. Alfreda Mikulskiene, CEO of the Stikliai Hotel, which is a member of the international hotel chain Relais & Chateaux, said that they signed an agreement with Hotusa last week.
"We have joined (the network) for a year. We do not expect to see a influx of visitors from the southern countries where this chain operates, but we do hope to enhance the awareness of our hotel brand," she said.
Noting that Relais & Chateaux prohibits its members from joining other chains, Mikulskiene said that Stikliai had entered into partnership with Hotusa for marketing purposes.
"This is an entirely different market. The joining of Hotusa puts our hotel into the common reservation system," she said.
Lietuvos Rytas, Lietuvos Zinios

The numbers of new cars in Lithuania increase at rapid pace
Lithuania's new car sales amounted to 10,403 units in the first ten months of 2004, rising by 25.5 percent from 8,288 new cars sold in the same period a year ago, according to data released by the market research company AutoTyrimai. In October, new car sales grew by 21.3 percent year-on-year to 1,172 units. Some 88.1 percent (9,160 units) of all new cars sold during the ten months were registered in Lithuania. In October, this percentage reached 87.1 percent (1,021 units).
The French group Peugeot led other carmakers in terms of Lithuanian sales with 1,282 new personal and commercial motor vehicles sold during the ten-month period. Germany's Volkswagen was second with 1,237 cars and the French carmaker Renault was third with 1,103 cars.
Lithuania's new car sales declined by 0.06 percent to 10,352 in 2003, from 10,358 new cars sold in 2002.
Lietuvos Zinios

Funds invest pension funds abroad
The pension funds of Lithuania have been boosting investments in foreign countries, which have added up to almost two-thirds of their total investments. On October 31, the portfolios of 14 domestic pension funds controlled by fund managers equalled LTL 59.67 million. Investments into foreign bonds and stock accounted for 65 percent in this amount. At the end of September, foreign countries numbered 59 percent of the overall funds of the local pension funds, the national Securities Commission announced.
The 12 pension funds owned by life insurance companies possessed LTL 22.8 million worth of funds at the end of the previous month. The sum included 62.7 percent of funds invested into EU and other foreign states based on a report of the commission. These funds invested abroad 61.5 percent of their total resources.
The commission further revealed that, following a second transfer of pension saving funds from the State Social Insurance Fund (SoDra) in the middle of September, the pension funds were prepared to invest the money. The proof of this was a strongly boosted number of transactions in the month concerned. The holdings, on behalf of their pension funds, each concluded 23 transactions in September on average, and 5 transactions - in October.
Lietuvos Zinios

Friday, 12th of November

Insurance market leader accumulates profit
Lietuvos Draudimas (Lithuanian Insurance), the country's largest insurance company, announced a net profit of LTL 9.5 million for the first nine months of 2004, down by 41.4 percent from a net profit of LTL 16.2 million in the same period last year.
The net profit for the nine months of 2003 included the result of Lietuvos Draudimo Gyvybes Draudimas (Lithuanian Insurance's Life Insurance), which was taken over by Hansabankas at the start of this year. Excluding the result of the life insurer, Lietuvos Draudimas' net profit grew by 2.2 percent this year.
"We remain one of the few insurance companies that manage to successfully provide insurance services to customers and post stable profits," Stasys Jakeliunas, Lietuvos Draudimas' finance director, said.
Lietuvos Draudimas said premiums written for the nine months increased by 2.3 percent year-on-year to LTL 162.3 million.
He added that the company was sticking to its annual net profit target of between LTL 10 million and LTL 15 million. The insurer expects to increase the present 30-percent share of the market by 2 percent in 2005.
Lietuvos Rytas

Electricity exports declined by 8.7 percent
Scheduled maintenance at Ignalina Nuclear Power Plant (INPP) has driven the exports of electricity by Lietuvos Energija (Lithuanian Energy), the state-run power utility, down by 8.7 percent, to 5.334 billion kWh in the first ten months of 2004. The power utility exported 5.796 billion kWh of electricity in the January-to-October period last year.
Lietuvos Energija supplied 3.072 billion kWh of electricity to Russia and 1.557 billion kWh to Belarus during the ten months of this year. Exports to Latvia, Poland and Estonia reached 452.7 million kWh, 210.5 million kWh and 38.5 million kWh, respectively.
Although the second unit of INPP was started up after maintenance in late October, the output of electricity was lower than expected on the back of technical failure of the third turbogenerator of the unit.
"Consumption of electricity in the region grows traditionally in fall as the weather gets colder. That is why the exports in summer or spring usually exceed those in autumn," said Rymantas Juozaitis, Lietuvos Energija CEO.
Respublika, Lietuvos Rytas, Verslo Zinios

Vilniaus Bankas is allowed to settle in the Ukraine
The board of the Bank of Lithuania has given a nod to the purchase of over 90 percent in Ukraine's Agio bank by Vilniaus Bankas, the largest Lithuania's commercial bank controlled by Swedish SEB Group. On October 25, Vilniaus Bankas got a permission of Ukraine's Competition Committee to acquire Agio bank. The transaction will be closed after the issue of respective permission by Ukrainian Central Bank, which is expected by the end of the year. Vilniaus Bankas revealed its intentions to purchase the majority holding in Agio bank in early October. The bank noted at that time that the overall investment in this project would reach LTL 80 million, including the amount payable for the shares.
The purchase of Ukrainian bank was a part of SEB plans to strengthen the positions of the group eager to offer adequate services to its customers active on Eastern European market, Vilniaus Bankas management said.
Lietuvos Rytas, Respublika, Lietuvos Zinios, Verslo Zinios

Thursday, the 11th of November

0.5 million CDs for Russians
Baltic Optical Disc (BOD), the sole Lithuania's producer of compact discs, has signed several contracts with Russia's periodicals' publishers. By the end of 2004, the company will supply Russian companies with approximately 0.5 million CDs, which will mostly be distributed attached to the most popular Russian magazines. Financial details have not been disclosed, however, the company said that the contracts had been concluded with St. Petersburg companies.
In the first nine months of 2004, BOD reported the output of 3.8 million CDs, a rise of 20.6 percent from the year-earlier figure of 3.15 million units.
Verslo Zinios

Russian giant purchased ERC
Russia's electricity trader Inter RAO UES has acquired and taken the control of independent Lithuania's electricity supplier Energijos Realizacijos Centras (Energy Realization Centre or ERC), the business consulting company VB Vilfima has announced on Wednesday. However, the business consultant refused to specify either the holding acquired or the amount paid for the stake by the Russian company.
"Lithuania's energy system is of particular significance for Russia, with regard to electricity supply to the exclave of Kaliningrad in particular. Thus, we are putting stress on strengthening of cooperation both in trade in electricity and implementation of joint investment projects in Lithuania," Ivan Abramov, Inter RAO UES representative, said.
ERC, which was established in late 2002 as a representative of Inter RAO UES in Lithuania, buys surplus electricity from Lietuvos Energija (Lithuanian Energy), the power utility, and sells this energy, generated by Kruonis Hydro Pump Storage Plant (HPSP), on foreign markets.
ERC has reported on its website that exports of electricity made up 371 million kWh in the first seven months of 2004.

Sugar consumption continues to downslide
Consumption of Lithuania-made sugar totalled 40,000 tons in the first ten months of 2004, a plunge of 42 percent from the year-earlier figure of 69,000 tons. In October alone, the sales of local sugar plummeted by 3.8 times, year-on-year, to 2,000 tons, from 7,600 tons in October 2003.
Meanwhile, Lithuania's government has assigned 50 million for offsets for the exports of 60,000 tons of surplus sugar in a drive to avoid Brussels' fines for the accumulation of surplus sugar stocks.
Exports of sugar reached 78,000 tons in the first ten months of 2004, a surge of 6 times from 13,000 tons exported in the January-to-October period a year ago.
Lietuvos Rytas

Wednesday, 10th of November

0.1-percent inflation recorded in October
An inflation of 0.1 percent was recorded in Lithuania in the previous month, though experts had projected a 0.5 percent monthly rate. The inflation resulted from higher prices of apparel, footwear and transport services. Compared to the end of December 2003, prices for consumer goods and services last month rose 2.7 percent. The yearly inflation, against October of 2003, amounted to 3.3 percent, Statistics Lithuania announced.
This year Lithuania posts inflation for the sixth time. In January, prices in the country were flat but dropped 0.2 percent in the next month. In the succeeding months prices climbed: 0.5 percent in March, 0.4 percent in April, 1.5 percent in May, and 0.1 percent in June. In July, the country recorded zero inflation, in the following month had 0.4 percent deflation and in September posted an inflation of 0.6 percent.
Kauno Diena, Lietuvos Rytas, Lietuvos Zinios, Respublika

Russians want to set up TV production plant near Vilnius
Rolsen Electronics, a Russian producer of electronic household equipment, has announced that it will construct a plant in Lithuania next year. The Russian company is eager to use Lithuania as springboard to western European markets. Rolsen has chosen a land area for the new facility near capital Vilnius, said Leonid Osipov, the marketing director at Rolsen Electronics. The target completion date for the construction of the plant is the first quarter of 2005. The investment is estimated at around USD 4 million. The new television plant in Lithuania should reach a yearly capacity of 400,000 units.
The decision to build the plant in Lithuania had come because of the rising competition in the Russian market. The movement of the plant to the Baltic state should help cut custom costs, since 70 percent of TV set components will flow from Europe.
Lietuvos Rytas, Lietuvos Zinios, Verslo Zinios

Sales by TV set maker surge 53 percent
Lithuania's TV set producer Siauliu Tauro Televizoriai (STT) reported sales of LTL 261.415 million for the first ten months of 2004, a surge of 53 percent from the year-earlier figure of LTL 170.885 million. In October alone, the company, which exports almost all of its products abroad, boosted sales by 38.2 percent, year-on-year, to LTL 36.632 million.
The sales have been growing on the back of stronger demand for our products on foreign markets and the expansion of our product range.
In October, the company launched the production of 6 new TV set models, including two models with flat 15" and 21" screens with an integrated DVD player.
STT, which currently operates two TV set assembly lines, expects to start up the third line in November.
For 2004, STT is projecting the output of 1.4 million TV sets, a twofold rise from the year-earlier figure of 683,000. Ten-month output surged by 72.8 percent, year-on-year, to 918,200 units.
Verslo Zinios

Tuesday, 9th of November

PET producers spend millions
Nemuno Banga Group, Lithuania's PET packaging producer, has purchased a Czech PET pre-form manufacturer and intends to invest around LTL 24 million in the plant.
Nemuno Banga Group has said it is planning to buy five additional PET pre-form molding lines and multi-layer pre-form lines for the Czech plant, which has been producing PET pre-forms since 1998. The value of the acquisition has not been disclosed.
"We are pushing our way into Europe as we realize that we must expand our production in different countries to survive amid severe competition from the EU old and new members states," said Arvydas Juozeliunas, CEO of Nemuno Banga Group.
Nemuno Banga Group said the acquisition was part of its strategy aimed at achieving a leading position in the European PET market. Juozeliunas said that the company now has "more than realistic" chances of doubling its share of Europe's PET market to 6 percent in 2005.
The new plant will supply customers in the Czech Republic, Germany, Austria, Hungary and Poland. It is expected to raise its annual sales from around LTL million in 2004 to LTL 62 million in 2006.
Earlier this month, the company unveiled plans to invest around LTL 60 million euros in the construction of a new plant in Russia's region of Nizhny Novgorod. It expects to have the new PET plant operational by April or May of 2006.
Lietuvos Rytas, Verslo Zinios

Kalnapilio-Tauro Grupe to distribute Cido drinks
Leading Lithuanian brewery Kalnapilio-Tauro Grupe has announced about its intentions to start the distribution of Cido products in Lithuania next year.
"Our major company purchased Cido Food Group, a Latvian producer of non-alcoholic beverages, and we plan to earn profit from this deal," Valdas Tekorius, CEO of Kalnapilio-Tauro Grupe, said.
However, he said, the negotiations were still going on the distribution of all Cido products (water, carbonated and non-carbonated drinks), except juice. In the event that the agreement is made, Kalnapilio-Tauro Grupe will start selling Cido products in Lithuania in 2005.
Verslo Zinios, Lietuvos Rytas

Growing oil prices affected producer prices
Lithuanian producer prices went up by 2.9 percent in October from September, driven higher by rising wholesale prices for oil products, the Statistics Department has announced. The producer price index (PPI) increased by 12.7 percent during the year to end-October 2004.
Excluding the oil product industry, overall producer prices edged up 0.5 percent month-on-month and were up 3.7 percent year-on-year.
Prices in the quarrying and mining sector increased by 10.2 percent, while prices in the manufacturing sector jumped by 3.3 percent month-on-month. On a year-on-year basis, prices in the respective sectors went up by 38 percent and 15.5 percent.
Prices in the utilities sector remained unchanged in October from September but fell by 1.3 percent in year-on-year terms.
Prices of products sold on the domestic market grew by 1.3 percent and export prices were up 4.5 percent month-on-month.
Lietuvos Zinios, Verslo Zinios

Monday, 8th of November

Sintagma, a Lithuanian company dealing with software development and system integration, earned LTL 13.3 million in consolidated income during the first three quarters of this year a decline by 4.3 percent (LTL 13.9 million) since the same period in 2003. Evaldas Drasutis, the chief executive officer at Sintagma, said he did not see such results as decline, because the largest portion of income was expected in the fourth quarter.
Sintagma reports that nine-month IT services of the company amounted to LTL 4.7 million, or 47 percent more than in the same period of 2003 when the sales came in at LTL 3.2 million. Sintagma projects a consolidated annual turnover of LTL 26 million in 2004, a hike of 13 percent versus the previous year (LTL 23 million).
(Lietuvos Rytas)

Danish to collect brewing equipment
Micro Matic, the leading Danish-based brewing equipment manufacturer, has launched the manufacturing of brewing installations in at the facilities of its unit in Kaunas in late October. Investments into new production facilities have already exceeded LTL 1 million. The plant would reach full design capacities and the number of employees would rise to 130 by January, the company reported. The company will export the output to Denmark and Micro Matic customers throughout the world.
Verslo Zinios

Palanga to fly from Lithuania to Sweden
In the coming week, airline Aviakompanija Lietuva will open a new air route from the seaside airport of Palanga to Sweden. The Lithuanian air company will operate aircraft Palanga in this route. The airline bought the aircraft for LTL 1.5 million few weeks ago. Palanga will carry passengers to two new places of destination in Sweden: Bilum and Malmo.
Aviakompanija Lietuva currently owns three ATRs performing flights from the airports of Kaunas and Palanga. The airline has announced plans to buy this year the fourth ATR, which will most likely handle flights from Palanga.
Kauno Diena

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