Observer "Lietuva"

WEEK 51st 2004

Saturday, 18th of December

Norfa expects bigger profit
Norfos Mazmena, the operator of Lithuania's third-biggest retail chain, anticipates annual sales of LTL 900 million this year, a rise of 45.2 percent from 2003. The company has said it expects to achieve a further 40 percent growth in sales, to LTL 1.26 billion, in 2005. The chain's sales reached LTL 620 million, including VAT, in 2003.
With a chain of 86 Norfa stores across Lithuania, Norfos Mazmena is the third-largest retail group in the country after VP Market and Palink.
Lietuvos Zinios

Lithuania's finance regulator trims 2004 GDP growth forecasts to 6.5 pct
Lithuania's ministry of finance has downgraded its forecasts of gross domestic product (GDP) growth and raised the inflation outlook for 2004 on the back of changes in Lithuania's economic environment in the second half of the year. According to adjusted estimates, in 2004 GDP will expand by 6.5 percent, a decline of 0.5 percentage point from previous forecasts. In December, annual inflation will hit some 2.9 percent, an increase of 0.2 point from earlier estimations. The average annual inflation forecasts were raised to 1.2 percent, from 1 percent.
Current account deficit should stay in the range of 8.5-9.5 percent of GDP in 2004-2007, the ministry has estimated, raising its previous forecasts of 7.8-8.4 percent of GDP on the back of stronger consumption and an increase in wages in the third quarter of 2004. A decline in current account deficit may only be expected from 2007 amid favourable increase in manufacturing capacities and stronger exports, both backed by EU assistance. In the opinion of ministry's experts, the economic growth should slow down in the final quarter of 2004 and the first quarter of 2005.
However, forecasts for the upcoming three-year period have been left unchanged, with the ministry estimating that in 2005 the country's GDP will expand by 6.5 percent, in 2006 - by 6.2 percent, and in 2007 - by 6 percent.
Respublika, Lietuvos Zinios, Lietuvos Rytas

SBA is the leader of Lithuanian furniture market
Companies of the concern SBA hav Color e climbed to the top three of Lithuanian furniture producers. Overall, the concern of Kaunas controls five furniture companies. The SBA companies, Klaipedos Baldai, Silutes Baldai, Kauno Baldai, Karige and Akmena, have experienced a year-on-year growth of 8.8 percent in sales during the first ten months of 2004. Their combined sales stood at LTL 232 million. All the five furniture makers within the SBA achieved in 2003 sales of LTL 259 million, up 30 percent from 2002.
The timber association Lietuvos Mediena reports that the six furniture manufacturers under Libros Grupe recorded LTL 197 million for consolidated sales in the ten months, a rise of 9.7 percent since 2003. The third major furniture group was Vakaru Medienos Grupe, its combined ten-month sales amounting to LTL 172 million. The sales grew 2.4 percent from the respective period in 2003. Baltijos Baldu Grupe, a concern of four companies, was the fourth major furniture supplier.
Lietuvos Rytas

Friday, 17th of December

Member of Citygroup acquires share issue of IKI
CVC International, a unit of Citigroup, the world's largest financial institution, is buying a new 50-million-euro share issue of IKI, Lithuania's second-biggest retail chain.
IKI is expected to make an official announcement about CVC International's investment in the chain by the end of the year. It will be CVC International's second investment in the Baltics following the group's investment in Tallinn's ferry company Tallink in September 2003.
IKI would not comment on the news. Aidas Mackevicius, CEO of Palink, the chain's operator, said only that "everything is going according to plan."
IKI has hired Sindicatum, a London-based corporate finance firm, to help it raise financing for the chain's expansion plans.
Respublika, Lietuvos Rytas

Turnover of Linas increases by one-tenth
Linas, the biggest linen textile manufacturer in the Baltics, reported sales of LTL 69.3 million for the first eleven months of 2004, a rise of 10.5 percent from the year-earlier figure of LTL 62.7 million.
"The rise is the result of active efforts of our marketing experts and a growing demand in linen textiles," Romualdas Mazylis, Linas' spokesman, said.
Exports comprised 92.5 percent of total output in the January-to-November period. Exports to EU markets accounted for more than 80 percent of sales.
Linas is projecting full-year pre-tax earnings of LTL 3 million. Revenues are seen reaching LTL 74 million in 2004.
Lietuvos Zinios

Nabukas has new owner
Narbutas & Ko, the largest Lithuania's office furniture manufacturer, has sold its kitchen furniture plant Nabukas to Libros Holdingas in a drive to focus on core business of office furniture manufacturing.
Petras Narbutas, chairman and shareholder of Narbutas & Ko, has sold 66 percent in Nabukas. Financial details of transaction have not been disclosed.
"By acquiring the prospective company of kitchen furniture and the famous trademark, we bid to reinforce our positions in Lithuania and step up the march to EU markets," Tomas Juska, director of Libros Holdingas, said.
Verslo Zinios, Lietuvos Rytas

Thursday, 16th of December

Grigiskes seek for bigger earnings
Grigiskes, Lithuania's leading hardboard and toilet paper producer, is projecting the pre-tax earnings of some LTL 8 million on sales of LTL 109 million for full 2005.
The company's board approved the projections for 2005 on Tuesday, Gintautas Pangonis, Grigiskes' CEO, said. For full 2004, Grigiskes was targeting the net earnings of LTL 8.7 million on sales of LTL 102 million. Profit forecasts would be met, however, the sales figure might lag behind the forecasts by several million litas, Pangonis admitted.
Lietuvos Zinios, Verslo Zinios, Respublika

Construction boom strengthens Akmenes Cementas
Akmenes Cementas, the sole Lithuania's cement manufacturer, reported revenues of LTL 98.2 million for the first eleven months of 2004, a rise of 15.7 percent from the year-earlier figure of LTL 84.9 million.
"The eleven-month increase is the result of fast growth in construction sector and a rise in cement usage in Lithuania. Similar trends have also been observed in Latvia," Arturas Zaremba, company's CEO, said.
Winter season weighed November sales slightly lower, Zaremba said, adding that the sales came in at LTL 7.38 million last month, a decline of 6.6 percent from November 2003. Revenues on exports increased by 13 percent, year-on-year, to LTL 26.1 million, in the eleven-month period.
Lietuvos Zinios, Respublika

Struggle over Starka in the market
Stumbras and Vilniaus Degtine, two leading domestic producers of alcoholic drinks, have announced that they are launching a battle against other producers and importers of bitter brand Starka. The two distilleries, according to their statement, want first to have the recipe standard for this drink approved.
"We see in the market the increasing quantities of the overseas and local produce, which sometimes has low quality, with the traditional brand labels. To protect customers from fake products, the responsible authorities should as quickly as possible attend to the issue and find the solution," Audrius Matulevicius, the managing director of Stumbras, said.
Differently from other popular bitter brands in Lithuania, the Agricultural Ministry has not approved any quality standards for Starka brand. The producers and importers have therefore vigorously capitalised on this situation. Fears are that unless the government introduces the standards and consumers are not provided with information about them the quality brand of Starka may be gone altogether, to cede the place to cheap synthetic surrogates.
At present there are eight brands of Starka on sale in the Lithuanian market. The producers of this bitter brand also include Lithuanian firms Anyksciu Vynas and Alita.
Lietuvos Rytas, Verslo Zinios

Wednesday, 15th of December

SBA plans to build furniture plant in Visaginas
Lithuania's multi-business concern SBA, the owner of Klaipedos Baldai, the largest domestic furniture producer, and Utenos Trikotazas, the leading Lithuania's textile maker, is reportedly eager to build a new furniture plant in Visaginas with the financial backing of the EU. The plans to build a plant in Visaginas, which would face a sharp rise in unemployment following the complete shutdown of Ignalina Nuclear Power Plant (INPP) by 2009, were announced by Prime Minister Algirdas Brazauskas at Tuesday's meeting with parliamentary Conservative faction.
Gintautas Misiukevicius, SBA spokesman, refused to comment, however, acting minister of economy Petras Cesna confirmed that the concern had submitted an application for EU assistance; yet, he refused to disclose the amount of assistance applied for.
Unofficial sources reported, meanwhile, that SBA expected to get some LTL 30 million in EU support. The new plant would manufacture cabinet and other furniture, and would employ a workforce of about 500, sources reported, adding that the annual turnover should exceed LTL 100 million.
Lietuvos Rytas, Lietuvos Zinios, Respublika, Verslo Zinios

Tax for cars as of 2006
Lithuania's Ministry of Finance will propose introducing the car tax, which would range between LTL 60 to 80 per year, from 2006, Algirdas Butkevicius, the country's Finance Minister, said at Tuesday's meeting with parliamentary Conservative faction. The disabled and pensioners would be relieved of this levy, he added.
"I think that the rate should be linked with engine power instead of the price of vehicle," Butkevicius noted.
The new car tax, if introduced, will partially offset a decline in budget revenues, which will result on government's plans to slash income tax rate by several percentage points.
The Cabinet also sees raking in additional revenues on the taxation of real estate. The new government has no intentions to reduce corporate profit tax, which is one of the lowest throughout the EU.
Lietuvos Zinios, Respublika, Lietuvos Rytas, Verslo Zinios

Agreement with Poland over electric power bridge
Lithuania has managed to persuade Poland to jointly apply to the European Commission for financing of a power link-up project. A connection between the Lithuanian and Polish power grids would reduce the dependence of the Baltic energy systems on Russia, enhance the reliability of electricity supply after the closure of the Ignalina Nuclear Power Plant and give access to the European electricity market.
A feasibility study worked out for the European Bank for Reconstruction and Development (EBRD) has put the total cost of the power link project at EUR 434 million. The experts recommended that Lithuania and Poland contribute one-third of the cost, with the rest to be provided by the EU in the form of grants.

Tuesday, 14th of December

Ukio Bankas plans to start operations in Scotland
Ukio Bankas, Lithuania's fifth-biggest commercial bank by assets, is considering opening a representative office in Scotland. This plan may be connected to the acquisition of a stake in Edinburgh football club Hearts by Vladimir Romanov, one of Ukio Bankas' shareholders.
"The bank is interested in expanding its financial contacts in Edinburgh, which is an important European financial centre," Edita Karpaviciene, Ukio Bankas' chairwoman, said.
She said the representative office in Scotland would analyze the financial situation in the region and consult its customers, as well as provide information about the bank's operations and services to local businesses.
Romanov, 57, is the board chairman and the largest single shareholder of Ukio Banko Investicine Grupe (Ukio Bankas' Investment Group) and of Universal Business Investment Group Management (UBIGM), a Lithuanian investment company that has made considerable investments in Bosnia and Herzegovina.
Kauno Diena, Lietuvos Rytas

Sales of automobiles
Lithuania's new car sales totalled 11,659 units in the first eleven months of 2004, rising by 26.4 percent from the year-earlier figure of 9,223 new cars, the market research company AutoTyrimai reported on Monday. In November alone, sales came in at 1,256 new cars, a surge of 34.3 percent from November 2003 and an increase of 7.2 percent from October.
Lietuvos Zinios, Lietuvos Rytas

Prices reduce turnover of Ekranas
Ekranas, one of Europe's leading colour picture tube manufacturers with a one-fourth market share, reported sales of LTL 444.7 million for the first eleven months of 2004, a rise of 6.1 percent from the year-earlier figure of LTL 419.2 million. However, in November the turnover plunged by 24.9 percent, year-on-year, to LTL 38.3 million, in the wake of unfavourable trends on international electronics market, Angelija Zokaitiene, head of the company's Investor and Public Relations Department, said.
"The electronics market has been in certain downstill of lately, and we no longer feel the growth trends, which prevailed early in 2004. The prices of products are on decline, which affects our sales," she said.
Zokaitiene predicted that Ekranas, similar to the majority of other electronics producers would fail to meet its full-year profit and sales targets on the back of unfavourable developments on global markets. Previously Ekranas said it was projecting the pre-tax earnings of at least LTL 25 million and the sales of LTL 560 million.
Lietuvos Zinios, Respublika

Monday, 13th of December

Imports and exports increase
Lithuanian exports advanced 18 percent in the first ten months of the year, with imports rising by a more modest 15.8 percent year-on-year. In January-October, the exports of domestic businesses were worth a total of LTL 20.823 billion. Imports were valued at LTL 27.72 billion, reported the national statistics office on Friday.
The foreign trade deficit of the country stood at LTL 6.9 billion, 9.7 percent more than it was in the first ten months of 2003.
Verslo Zinios, Respublika

Flows of passengers in airport grow
A total of 1.015 million passengers have passed through three airports in Lithuania in January-November of 2004. Vilnius International Airport, served 919,800 passengers during this period. Compared to January-November 2003, the number of passengers passing through the airport in Vilnius increased nearly 38 percent this year. In November alone, the airport served 75,970 passengers, 37 percent more than in November 2003.
Verslo _inios, Respublika

Doleta started exports to Ireland
Doleta, a manufacturer of windows and doors in Lithuania, reported that it has dispatched its first deliveries to Ireland. The volume of orders in this European country amount to LTL 124,000, Doleta said.
To raise export volumes, Doleta renovated its external trade network this year. Since January, exports to eastern markets, including CIS, have been handled by its subsidiary Doletos Langai (Doleta Windows).
Verslo Zinios

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