Observer "Lietuva"

WEEK 50th 2004

Saturday, 11th of December

Stumbras to supply bioethanol to Germany
Stumbras, Lithuania's largest alcoholic beverage producer, has announced that Germany's Brenntag International Chemicals, the world's second-biggest oil chemical industry group, will buy 7,000 tons of bioethanol produced at its western Lithuanian distillery next year. This accounts for almost 60 percent of the total volume of bioethanol planned to be produced at Stumbras' plant in 2005.
Arvydas Lipskis, Stumbras' expansion director, said Stumbras plans to produce around 12,000 tons of high quality bioethanol at the _ilut_ distillery in 2005 and is in talks with other potential foreign partners to sell them the product.
Lietuvos _inios

IMF speaks for lower income tax
International Monetary Fund (IMF) recommends Lithuania's authorities to cut the income tax rate to at least 30 percent and shun from using of tax system as a tool to implement social objectives. "Symbolic reduction of income tax would not yield the desirable effect, thus, in our opinion, the country should seek for an ambitious rate review," IMF mission head Ashoka Mody said at Friday's news conference.
He refused to specify the income tax rate the fund found advisable; however, the official noted that "the reduction of rate up to 30 percent would not be ambitious". The income tax rate in effect in Lithuania currently stands at 33 percent.
During series of meetings with government representatives, IMF officials proposed to reduce the income tax to 26 percent, and raise the profit tax to 26 percent, from 15 percent, simultaneously. However, Lithuania's officials seemed unwilling to side with those proposals.
Moreover, the mission advised to eliminate tax breaks in effect, including a possibility to regain a share of income tax for a purchase of accommodation.
Lietuvos _inios, Respublika

VP Market opening expanded mall Akropolis in Vilnius
VP Market, the largest retail chain in the Baltics, is opening a two-story annex to its Akropolis shopping and entertainment complex in Vilnius on Friday. The group has invested around LTL 150 million in the new extension that makes Akropolis the biggest shopping centre in the Baltics.
The expanded complex, described as a "town within the town," houses about 200 stores. Ermita_as, VP Market's new 23,000-m2 construction materials and household goods store, occupies around one-third of the total space of the new building. The construction of the new annex took six months. The group has plans to build another Ermita_as in Lithuania's second-biggest city of Kaunas in the future.
Respublika, Lietuvos Rytas

Friday, 10th of December

Iki started invasion into Latvia
Palink, the operator of Lithuania's retail chain IKI, has concluded a cooperation agreement with Latvia's Prestizs, and has taken over the lease of four food stores, including one store in Riga and three in Jelgava, in the neighbouring countries. The agreement also stipulates that Prestizs will build new trade centres and food stores, which will be used for trading operations by Palink's Latvia-registered subsidiary.
Latvia's Palink has been coordinating the commercial activities of IKI chain in Latvia since autumn 2004.
Tomas Vai_vila, a spokesman for Palink, said that the new supermarkets in Latvia could begin operating in the first half of 2005. IKI currently runs a chain of 130 stores across Lithuania, including 65 IKI supermarkets, 14 Ikiukas convenience stores and 51 Pigiau Grybo discount stores.
For 2003, IKI reported sales of LTL 1.123 billion, a rise of 12.3 percent from the year-earlier figure of LTL 1 billion.
Lietuvos Rytas, Verslo _inios, Respublika

November was unsuccessful for Lifosa
Lithuania's phosphate fertilizer Color manufacturer Lifosa, controlled by Russia's mineral fertilizer group Eurochem, reported a turnover of LTL 456.327 million for the January-to-November period of 2004, a rise of 14.7 percent from the year-earlier figure.
In November, however, the sales by the K_dainiai-based company plunged by 30.5 percent, year-on-year, to LTL 25.849 million.
Regvita Ivanovien_, Ceo of Lifosa, attributed a decline in November sales to poor weather conditions, which delayed the departure of India-registered ship with company's products from Klaipeda seaport.
The Lithuanian fertiliser company delivered 633,770 tons of diammonium phosphate, its main product, in eleven months, a decline of 6.2 percent compared to the corresponding period of 2003. Regardless of this slump, the firm gained more income thanks to rising prices.
Lietuvos _inios, Verslo _inios

Fitch raised ratings of Snoras
International rating agency Fitch Ratings has affirmed the ratings for the fourth-largest Lithuania's commercial bank Snoras, leaving the long-term rating at BB- and short-term rating at B. The rating Outlook for the bank, which is controlled by Russia's Conversgroup, remained stable. The bank's profitability remained consistent despite falling interest rate margins in a competitive market. Thanks to its mini outlets, it was able to build up a good retail franchise, increasing its retail deposit market share to around 10 percent by end-Sept 2004 and reduced concentration in its loan book, Fitch said in a press release. Capitalisation and liquidity were sound, the agency noted.
However, Fitch voiced some concerns over the bank's increasing level of non-resident deposits, which can be volatile, as well as its exposure to the Russian real-estate sector through its newly established project finance subsidiary.
Lietuvos _inios, Verslo _inios

Thursday, 9th of December

Consumer price index amounts to 0.3 percent
Higher liquefied gas, diesel fuel, food and clothing prices drove Lithuania's consumer price index (CPI) up by 0.3 percent in November from October, the country's Statistics Department has reported. This brings inflation for the twelve months to November 30 to 3.0 percent, close to analysts' full-year 2004 inflation forecasts. The Statistics Department had forecast inflation of 0.2 percent for November due to a slight rise in prices for clothing, medicines and liquefied gas.
"The 0.3 percent inflation rate is in line with analysts' expectations. There were no reasons for a sharper rise in prices. Prices tend to go up in November as food prices increase, while seasonal discounts are usually not available until December," Rimantas Rudzkis, chief analyst at Nord/LB Lietuva, said.
Nord/LB Lietuva forecasts an annual inflation rate of 2.9 percent this year. Vilniaus Bankas, Lithuania's largest bank by assets, projects 3.0 percent inflation, slightly above the Finance Ministry's inflation target of 2.7 percent.
Respublika, Verslo _inios

Finnish acquired press distributor
Finland's Rautakirja announced on Wednesday that it has acquired a 51 percent stake in the Lithuanian press distribution company Impress Teva. The group owns the company Finnkino, which operates Coca-Cola Plaza Forum Cinemas Vingis and Forum Cinemas Akropolis in Vilnius.
"This is a further element in our Baltic strategy and a natural direction for expansion, since we are involved in the distribution of domestic and foreign newspaper and magazine titles in the Finnish market and also in Estonia and Latvia", Raimo Kurri, the senior vice-president at Rautakirja, said.
In 2003, Impress Teva generated EUR 8.4 million euros in sales. The company handles press deliveries to about 1,300 outlets.
Lietuvos _inios

Low EU quota brings Lithuanian starch mills to halt
Both Lithuanian starch plants have stopped production due to a low national quota assigned by the EU. Stumbras, Lithuania's largest distillery, announced in back early October that it had decided to close down its Antanavas mill. Ambrazi_ki_ Krakmolas, the other starch producer, has also confirmed that it is cutting its workforce.
Lithuania's 2004 potato starch production quota was set at 1,211 tons, almost five times as low as that of neighbouring Latvia. The EU proposes to leave the same quota in place in the next two years, but Lithuania is asking for its quota to be increased to 4,855 tons annually. The director of Ambrazi_ki_ Krakmolas declined to predict what fate awaited the plant in case Brussels refused to increase the quota. Romanas Raulynaitis, chairman of Stumbras' supervisory board, also said that everything would depend on the size of the quota. The two mills produced a total of 3,240 tons of starch in 2003.
Lietuvos _inios

Wednesday, 8th of December

Exports increase turnover of Sanitas
Sanitas, the largest Lithuania's pharmaceutical company, reported a turnover of LTL 40.388 million for the first eleven months of 2004, a surge of 37.4 percent from the year-earlier figure of LTL 29.388 million. In November alone, the sales surged 74 percent, year-on-year, to LTL 4.224 million.
Eleven-month sales on domestic market increased by 10 percent, to LTL 8.125 million, while export sales soared 47 percent, to LTL 32.263 million.
January-to-November sales to Latvia's Grindex, the major customer of Lithuania's pharmaceutical company, surged 67 percent, to LTL 30.533 million, comprising 75.6 percent of total turnover.
Sanitas reported LTL 4.748 million in net earnings for the first ten months of 2004.
Lietuvos _inios

The Code of Honour in Lithonia’s brewers business
Seven of nine members of the Association of Lithuanian Breweries signed on Tuesday under the Code of Honour of the Lithuanian Brewers. It took eighteen months to work out and coordinate the code. Lithuania became the first Baltic state to have such a book of norms for beer makers.
The Code of Honour was signed by _vyturys-Utenos Alus, Kalnapilio-Tauro Grup_, Ragutis, Gubernija, Rinku_kiai, Kauno Alus, and Ma_eiki_ Lokys.
The Code of Honour of the Lithuanian Brewers represents a collection of rules and restrictions, by which the brewers commit themselves to observe public interests and ethic norms during the advertising of their products and competing among them.
The essential point in the codes is that brewers obligate themselves not to producer stronger than 9.5-volume beer.
Lietuvos Rytas, Respublika

New player in payment card market
Hansabankas has issued a new family of paying cards in cooperation with VP Market, the country's number one retail chain. The two companies are targeting an estimated 130,000 customers. This is the second such project in which VP Market has collaborated with a commercial bank. In December 2003, a similar co-branded payment card Visa Electron/Maxima/Senukai was issued by VP Market, Vilniaus Bankas and the retail chain Senukai. The number of these cards added up to 66,000 at the end of November 2004.
"Now that we are in cooperation with the two major banks in the country, the discount scheme Maximum is available to most of the population in Lithuania," Ram_nas Klyvis, the chief business analyst at VP Market, said.
Lietuvos Rytas, Verslo _inios

Tuesday, 7th of December

Beer market grew 5.6 percent this year
The Lithuanian beer market grew by 5.6 percent, to 234.01 million litres in the first eleven months of 2004, from LTL 221.51 million in the January-to-November period last year, the Lithuanian Brewers' Association has reported.
In November alone, the country's nine major breweries, which are members of the association, raised their aggregate domestic beer sales by 13.5 percent, year-on-year, to 18.27 million litres, from 16.1 million litres in November 2003.
_vyturys-Utenos Alus raised eleven-month sales by 2.44 percent, to 110.39 million litres, from 107.76 million litres a year ago. Its share of the domestic beer market, however, slipped to 47.17 percent.
Kalnapilis-Tauras Group ranked the second with eleven-month beer sales of 56.67 million litres, a rise of 11.03 percent, year-on-year. The brewery's market share stood at 24.22 percent as of late November.
Ragutis raised its sales by 12.43 percent, to 23.69 million litres, while the brewer's market share grew to 10.12 percent.
Lithuanian beer producers recorded a 6.6 percent decline in their aggregate domestic sales, to 241.63 million litres, in 2003.
Respublika, Verslo _inios, Lietuvos Rytas, Lietuvos _inios

Maxima Baz_ and Ermita_as will be erected near Kaunas
Vilniaus Akropolis, a real estate man agement and development company, unveiled its plans to build a Maxima Baz_ shopping centre and Ermita_as, a retail centre selling construction materials and household goods, near Kaunas. 60,000-m2 building will be built near the intersection of Savanoriai Prospect and the Vilnius-Kaunas highway.
Investment in the object will amount to LTL 120-130 million. Both centres will resemble to those based in Vilnius. Ermita_as should be constructed in Klaip_da as well.
Respublika, Lietuvos Rytas

Fuel prices decreased
LUKoil and Statoil, two leading Lithuania's gas station chains, cut its retail prices of gasoline on Monday. Retail prices of gasoline declined by 2 cents, while the prices of diesel fuel notched down by 3 cents per litre.
Wholesale prices of gasoline and diesel fuel declined by LTL 24 and LTL 32 per ton respectively in last ten days. At LUKoil stations in Vilnius, the prices of 95 gasoline brand and diesel fuel currently stand at some LTL 2.62 and LTL 2.6 per litre respectively. At Statoil stations, the prices of 95 gasoline brand and diesel fuel average at LTL 2.65 and LTL 2.63 per litre respectively.
Meanwhile, Ma_eiki_ Nafta (Mazeikiai Oil), the Lithuania's oil refining and transportation complex, lowered the wholesale price of its 95 gasoline brand by 1 cent, to LTL 2.23 per litre on Monday.
Verslo _inios, Lietuvos Rytas

Monday, 6th of December

Sugar producers are worried
Three sugar factories in Lithuania controlled by the Danish group Danisco Sugar are eagerly awaiting the reform of the EU sugar sector. Because of the uncertainty in the sector, the companies have suspended all major investment projects. The EU has proposed cutting sugar prices by a third and reducing sugar output in order to prevent dumping of surplus produce in other countries.
For 2004-2005, the local factories of Danisco Sugar have secured a combined production quota of 82,100 tons. The companies purchased 65,800 tons of sugar beet in 2003 to 2004.
Egl_ Adomavi_ien_, the chief financier at Danisco Sugar in Lithuania, has forecasted no price cuts for the produce of the company in 2005. The company, she said, will be trading the sugar manufactured this year.
Lietuvos Rytas, Lietuvos _inios

IAE produced 3 percent less electric energy this year
The Ignalina Nuclear Power Plant (IAE) posted electricity sales of 13.29 billion kWh for the first eleven months of 2004. The company's output during the period stood at 13.41 billion kWh. Eleven-month output of the n-plant last year was 3 percent higher at 13.86 billion kWh. This year, the company boosted eleven months sales by 4 percent from 12.75 billion kWh in 2003.
In November 2004, the Ignalina plant marketed 1.42 billion kWh of electricity and generated 1.54 billion kWh of electricity. The output this year slumped owing to repairs in unit one that took almost six months.
Lithuania is making preparations for the expected shutdown of unit one in the plant on the target date of December 31. The stoppage of unit two is scheduled for year 2009.
Kauno Diena

Gintarin_s Avialinijos purchased plane
Airline Gintarin_s Avialinijos purchased a new 28-seat SAAB 340B, which was carried to Lithuania on Thursday. The air company, using a trademark Amber Air, is expected to start flights to Austria this year.
“The newly acquired aircraft is to be operated on charter flights. We are in talks over carriage of passengers to sports matches and business meetings, and to airports near popular skiing resorts,” Gintarin_s Avialinijos reported.
The heads of the company refused to reveal how much the company paid for the SAAB 340B. Lietuvos Rytas, Respublika

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