Observer "Lietuva"

WEEK 47th 2004

Saturday, 20th of November

0.2 percent inflation forecasted for November
The Lithuanian Statistics Department forecasts that the country's consumer price index (CPI) will go up by 0.2 percent in November from October due to a slight rise in prices for clothing, medicines and liquefied gas.
The statisticians had forecast inflation of 0.5 percent in October but the actual CPI increase was 0.1 percent. The annual inflation rate reached 3.3 percent last month.

Repairs of Ignalina nuclear plant were extended
Repairs of generator of the second unit of Lithuania's Ignalina Nuclear Power Plant (INPP) have been extended by the end of November. The reactor, which was started up in late October after almost six months of turnaround, is operating at half capacities amid failure to establish the fault at one of two generators of the unit.
"The repairs of generator have not been closed as we cannot establish the fault. The defect is absolutely unique, microscopic, and we are conducting the works in cooperation with producers, representatives of St. Petersburg-based Elektrosila plant," Viktoras Sevaldinas, INPP CEO, said.
Meanwhile, longer-than-planned maintenance at INPP prompted Lietuvos Energija (Lithuanian Energy), the power utility, to trim November schedule of power exports. Moreover, the utility has admitted that it will fail to reach the full-year exports target of 7 billion kWh.
Lietuvos Zinios

Iki opens the biggest retail trade store in Mazeikiai
Iki, the second largest retail network operator in Lithuania, plans to open four new supermarkets by the end of 2005. On Friday, one of them was opened in the northern town of Mazeikiai. Iki invested LTL 11.6 million into this store. The supermarket chain, which belongs to a family from Belgium, now runs 128 stores with a total staff of more than 5,000.
In the previous year, the sales of Iki advanced 12.3 percent to LTL 1.123 billion.
Respublika, Lietuvos Rytas

Friday, 19th of November

Insurance company - for foreigners
A foreign bidder was announced the winner of the privatisation competition for a 99.92 percent stake in Lithuanian Export and Import Insurance (LEID). The winner has been invited to negotiations with the State Property Fund. Unofficial sources confirmed that the winner of the tender is Coface, a leading global credit insurance company, which is under the control of Austria-registered Osterreichische Kreditversicherung Coface.
Six potential buyers sent bids, whereas the privatisation document kits were purchased by seven potential investors, the fund reported. The six included four foreign investors.
During the preceding failed tender for LEID, the government asked for a minimum of LTL 19.6 million for its stake.
The export and import insurance operator earned net profits of LTL 0.6 million during the first three quarters of 2004, an amount similar to its earnings in the first nine months of the previous year. The company controls 40.6 percent of the commodity credit insurance market in Lithuania in terms of premiums.
Lietuvos Rytas, Respublika, Lietuvos Rytas

Five furniture makers account for half of exports
Lithuania's five biggest furniture producers account for more than a half of the country's total furniture exports. Combined exports by the top five producers - Klaipedos Baldai, Vilniaus Baldai, Freda, Silutes Baldai and Venta - increased by 13.7 percent year-on-year to LTL 297.14 million in the first nine months of 2004.
Some 28 local furniture producers export their products to foreign markets.
Imantas Lazdinis, director of the association Lietuvos Mediena, said that the country's largest furniture manufacturers each have long-term contracts with at least one major buyer, which ensures that they have enough orders to keep them working.
The key buyers of Lithuanian furniture are Sweden's furniture group IKEA and Francodim of Belgium.
Data for the first half of this year showed that the United Kingdom was Lithuania's biggest furniture export market, accounting for 13 percent of the total, followed by Sweden with 10 percent, Denmark with 8 percent, the US with 7 percent, Norway with 6 percent, and Belgium with 5 percent.
Verslo Zinios, Respublika

Performance of Nordea Bank Lietuva is profitable
Nordea Bank Lietuva, a Lithuania-based branch of leading Nordic and Baltic finance group Nordea Bank, reported LTL 2.874 million in net profit for the first ten months of 2004, sharply reversing the year-earlier losses of LTL 1.2 million. For full 2003, Nordea Bank Lietuva posted a loss of LTL 941,000.
"The bank is growing on the back of favourable loan conditions, new instruments, the expanded network of branches and right development strategy," Steen Trondhjem Nielsen, Nordea Bank Lietuva CEO, said.
The bank's assets surged two-fold in the first 10 months of 2004, to LTL 1.382 billion, from LTL 51.4 million in early January. Loan portfolio soared 2.27 times, to LTL 1.057 billion, from LTL 464.9 million, while deposits rocketed up by 185 percent, to LTL 532.6 million, from LTL 186.9 million in early 2004.
Lietuvos Zinios, Verlso Zinios, Lietuvos Rytas

Thursday, 18th of November

Lithuania is the cheapest country in Europe
Norway is the most expensive country in Europe and Lithuania is the cheapest, says a report of business news service Bloomberg. It cited a survey carried out in 18 nations by a Stockholm-based Pricerunner in October.
The findings revealed that the prices of prices for 48 goods including a McDonald's Corp. Big Mac meal in Lithuania are 26 percent below the average. Estonia's prices are 19 percent lower than the average.
According to Pricerunner, Lithuania is one of the poorest countries of the ten new EU members.
The survey compares prices for a movie ticket to see the Bourne Supremacy starring Matt Damon on a Saturday night: the ticket in the U.K. costs EUR 14.3, versus EUR 3.86 euros in Lithuania. A 500-gram box of spaghetti costs EUR 1.63 euros in Norway, against EUR 0.62 in Lithuania. Lietuvos Rytas, Lietuvos Zinios, Respublika, Verslo Zinios

LTL 150 million are necessary for reconstruction of Sventoji port
Lithuania is set to rebuild the port in Sventoji, close to the Latvian border. It will be the country's second Baltic Sea port. The government decided to establish the Sventoji state seaport and defined the boundaries of its land and water area on Wednesday.
The Sventoji port will be administered by the Klaipeda State Seaport Authority, the government's press office said. The rebuilt port in Sventoji will be used by vessels of the national border guard, rescue, oil spill recovery, fire fighting, environmental protection and other services. The port could also service fishing boats, small cruise ships, small passenger vessels and yachts.
Funding for the reconstruction of the Sventoji port is expected to come from the EU structural funds and from the national budget. Private companies and individuals could contribute funds for this purpose as well. LTL 150 million are to be invested in the reconstruction of the object.
Lietuvos Zinios, Kauno Diena, Lietuvos Rytas, Respublika

Lithuanian construction sector grows
Lithuanian builders carried out construction work for a total of LTL 3.342 billion during the first nine months of 2004, a rise of 6.3 percent from the year-earlier figure, the Statistics Department has reported. Works carried out in Lithuania made up LTL 3.3 billion, a rise of 6.5 percent from the January-to-September period of 2003. Meanwhile, works carried out on foreign markets declined by 9.3 percent, year-on-year, to LTL 42 million.
In the third quarter alone, domestic builders carried out construction work for a total of LTL 1.505 billion, an increase of 2 percent from the third quarter of 2003. Works on domestic market comprised LTL 1.489 billion or 99 percent of total works, while works abroad accounted for the remaining LTL 16 million or 1 percent.
Investments into the construction and reconstruction of residential buildings made up LTL 310 million in the July-to-September period, a surge of 77 percent from the year-earlier figure.

Wednesday, 17th of November

Milk price grew by 25 percent over a year
The average raw milk purchase price in Lithuania reached LTL 508 per ton in October, rising by 25.3 percent from the year-earlier figure of LTL 405.3, the country's Agriculture Ministry has reported. The ministry has also announced it will start publishing the natural milk prices alongside the average prices of base indexes' milk from October. The average price of natural milk made up LTL 642 per ton in October. Lithuanian dairy producers purchased a total of 141,000 tons of raw milk during October, an increase of 13.9 percent year-on-year. In the first ten months, milk purchase volumes rose by 11.9 percent, year-on-year, to 1.179 million tons.
Vikeda, a dairy company based in Kedainiai, continued to pay milk suppliers the highest price, at LTL 750 per ton, last month. The company paid LTL 878.2 per ton of natural milk on average. Pieno Zvaigzdes paid an average of LTL 500.5 per ton; Zemaitijos Pienas paid LTL 533 per ton of milk.
Respublika, Lietuvos Rytas, Lietuvos Zinios, Verslo Zinios

Utenos Trikotazas raised its turnover
Utenos Trikotazas, Lithuania's leading knitwear manufacturer, reported sales of LTL 112.93 million for the first ten months of 2004, a rise of 1.6 percent from sales of LTL 111.174 million in the same period a year ago.
"Our operations are flexible enough to promptly fulfil orders that are smaller but have a greater value-added," Regina Sajiene, CEO of Utenos Trikotazas, said.
She added that the company aimed to maintain last year's sales and earnings levels following a change in its sales structure.
Sajiene also mentioned that sales grew mainly because of more intensive exports to the United Kingdom, France, and Switzerland. The foreign sales of the knitwear producer account for 90 percent of its total income.
The textile group has forecast that turnover this year will reach LTL 193 million, a rise of 6.7 percent than in 2003. Net profits are expected to equal LTL 15.9 million, an increase of 20.8 percent year-on-year.
Lietuvos Zinios, Verslo Zinios

Retail trade soared
Lithuania's retail sales totalled LTL 14.157 billion in the first nine months of 2004, a rise of 10 percent in comparative prices from the year-earlier figure, the Statistics Department has announced on Tuesday. Retail sales, excluding sales of motor vehicles and motorcycles, went up by 11.6 percent in the reporting period.
In September, retail turnover declined by 2.1 percent from August. Excluding the sales of motor vehicles and motorcycles, the drop was 3.2 percent versus August.
Experts claim that sales of certain goods declined in September due to season.
Verslo Zinios, Respublika

Tuesday, 16th of November

Five bidders for Lithuanian gas pipeline expansion
Five local and foreign companies have submitted bids for a 100-million-litas contract to build an additional pipeline from Kaunas, Lithuania's second-biggest city, to the country's border with Kaliningrad. The natural gas distribution and transportation company Lietuvos Dujos (Lithuanian Gas) announced the international tender to select a contractor for the expansion project in early October.
Jonas Janulionis, Lietuvos Dujos technical director, said that they expected to sign a contract with the winning bidder sometime around mid-December, with construction work to be completed by the end of 2005. The contract involves the construction of a gas pipeline from Kaunas to Sakiai, southwestern Lithuania, and a Sakiai metering station.
Lietuvos Dujos itself will finance the construction of the new pipeline, but later, when transit gas shipments to Kaliningrad increase, Russia's gas giant Gazprom will pay its share of the investment costs, amounting to around two thirds of the project value, in the form of transit fees.
The project is aimed at building a new 63-kilometer pipeline from Kaunas to Sakiai, parallel to the existing one, in 2005. It also calls for the reconstruction of the Sakiai gas metering station.
Lietuvos Zinios, Respublika, Lietuvos Rytas

Topo Centras expands on franchising
Topo Centras, the leading Lithuania's household appliance and electronics trader, has opted to pursue further expansion via franchising, which is expected to bring in some 30-40 percent growth in sales each year. The first franchised outlets should be opened in Varena and Prienai in December.
Topo Centras had no stores in about 40 smaller Lithuania's towns, which prompted the company to think of new ways for expansion, Aurelijus Rusteika, Topo Centras' CEO, said.
Under the franchise contract, the franchisee shall purchase goods from Topo Centras or a supplier specified by the franchisor, and trade in these goods at prescribed prices.
Topo Centras' franchise contracts with the term of some 3-to-5 years carry a fixed monthly fee of LTL 100. Moreover, the contracts prescribe to set 2 percent of total turnover aside for advertising and marketing fee.
Topo Centras owns 28 stores: 24 in Lithuania and 4 in Latvia. 4 additional stores are to be opened in Lithuania and one in Latvia by the end of this year.
Respublika, Lietuvos Rytas

Lithuania's reserve money rose by LTL 393.2 million or 6.2 percent in October from September, to reach LTL 6.697 billion, the central bank has announced. Balances on commercial banks' correspondent accounts increased by LTL 269.3 million, currency in circulation grew by LTL 100.9 million, and commercial banks' obligatory reserves in foreign currencies firmed by LTL 24.6 million.
The rise in reserve money was also prompted by LTL 390.9 million in net purchase of foreign exchange from commercial banks.
Lietuvos Rytas, Respublika

Monday, 15th of November

Finns acquired Informacines Technologijos
Finnish IT group AffectoGenimap has acquired 75 percent in Lithuania's IT group Informacines Technologijos this week.
"With this merger, we will strive to take over the experience of the Finnish company in installation and maintenance of data analysis and geoinformation systems," Kestutis Uzpalis, Informacines Technologijos CEO, said.
AffectoGenimap purchased the 75-percent holding from investment funds Baltic Investment Fund and EQVITEC Technology Fund, and several group employees, Uzpalis said. The remaining 25 percent stake remains in the possession of Informacines Technologijos' staff. Informacines Technologijos group controls Latvia' IT company Mebius IT and 10 percent in Icefire, Estonia's business management system developer. The group currently employs a workforce of 200.
Informacines Technologijos Group reported LTL 6 million in pre-tax earnings for the first nine months of 2004, an almost fourfold rise from the year-earlier figure.
Verslo Zinios, Lietuvos Rytas

Finnish company is the first client of Vilsota industrial park
Vilsota, a producer and trader of construction materials in Vilnius, has been injecting funds into a modern warehousing and logistic centre in the country's capital city. Ramirent, a Finnish company offering lease of construction equipment, on Thursday officially launched operations in the new centre of Vilsota. The facility is situated in the so-called industrial park of Vilnius, Zemieji Paneriai district. The centre stretches for 13.5 hectares. Ramirent was the first customer of Vilsota to move into the new facility.
Vilsota has constructed for the foreign company a complex of 2,000 m2, which is worth LTL 3 million.
The Lithuanian company said in a report that the customers of the industrial park should include construction, transportation and logistic service providers, because the facility was located near the main traffic arteries leading to Vilnius. This year Vilsota expects to achieve sales of LTL 15 million.
Lietuvos Rytas

Geography of trade
Lithuania's exports to the European Union (EU-25) accounted for 65 percent of the total during the nine-month period in 2004, while imports from the Community comprised 63.7 percent of total imports this year. Exports to CIS states and imports from the region made up 16 percent and 26.4 percent respectively of total exports and imports indexes.
The list of key Lithuania's exports partners showed Germany (10.5 percent of total exports), Latvia (10 percent), Russia (8.9 percent), and Switzerland (6.3 percent). Meanwhile, the key import partners were Russia (21.5 percent of total imports), Germany (17 percent) and Poland (7.4 percent).
Verslo Zinios

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