Observer "Lietuva"
WEEK 7th 2004

Saturday, 14th of February

Hotels share stars
Another 34 Lithuanian hotels and guesthouses have been given star rating recently.
The highest rating of five stars has been given for Crowne Plaza Vilnius. It is only the second hotel in the country to receive the highest rating. The first hotel to receive five-star rating was Stikliai hotel also located in Vilnius.
Lidija Luksyte, representative of the Lithuanian Department of Tourism, says the majority of the hotels in Lithuania are of middle and higher class. She adds that although the classification of hotels is finally gaining speed, there are still a lot of hotels without the obligatory star rating. Of the 230 hotels currently registered in Lithuania, only 67 have been classified. The Law of Tourism states that all hotels registered in Lithuania must be classified until April 1, 2004.
Rest-houses and campings will be classified in the nearest future as well.
Lietuvos Rytas, Lietuvos Zinios
es do not have permits for the export. However, most of them expect to receive it in the nearest future.
(Lietuvos Rytas, Lietuvos Zinios)

Zero inflation registered in Lithuania in January
Consumer prices in Lithuania held steady for the second consecutive month in January, the country's Statistics Department has reported.
The statisticians had forecast a 0.3 percent rise in the consumer price index (CPI) for January. Over the year from January 2003 to January 2004, consumer prices in Lithuania fell by 1.3 percent.
Statisticians say that the zero inflation was mainly influenced by discounts on clothing and shoes. Their prices went down by 3.8 percent in January. Among the sectors, where prices grew most in January, was the transport. The rise was mainly due to the increase of fuel price – diesel fuel prices went up by 7.7 percent, while petrol prices edged up by 3.2 percent. Prices of alcohol and tobacco increased in Lithuania in January as well.
Experts predict that 1.5-2.5 percent inflation will be registered in Lithuania for the full year 2004.
Respublika, Lietuvos Rytas
(Respublika, Lietuvos Rytas)

Mazeikiu Nafta paid pollution fine to Latvia
Lithuania's oil concern Mazeikiu Nafta (Mazeikiai Oil) has reimbursed Latvia's losses sustained due to oil spill at the Butinge crude terminal after three years of haggling.
Pursuant to peace treaty with the Latvian Marine Environment Board, Mazeikiu Nafta transferred LTL 108,000 to Latvia's budget this week.
Some 2.94 tons of crude spilt into the Baltic Sea on March 6, 2001, upon breakdown of a hose during the pumping of crude at the Butinge terminal, located near the Lithuanian-Latvian border.
The year 2001 was one of the darkest in the short history of Butinge terminal, which was built back in 1999. In November 2001 nearly 60 tons of crude spilt into the sea; the crude, however, did not reach Latvia's territorial waters then.
After the incident the terminal was closed for four months, while Mazeikiu Nafta paid a fine of LTL 2.5 million to environment protection authorities.

Friday, 13th of February

Lithuania will pay the Swedes USD 12.5 million
The Lithuanian government has said it will not appeal an international arbitration ruling that ordered Lithuania to pay USD 12.5 million in damages to the Swedish oil company Svenska Petroleum Exploration.
Speaking before the parliament on Thursday, Prime Minister Algirdas Brazauskas said the government sees the case as a major defeat for the state and will look for possible ways of satisfying this claim.
The government has decided to discontinue litigation in Copenhagen, but the international arbitration court's decision to award damages to Svenska will have to go through the judicial procedure in Lithuania or some other country.
Svenska, which holds another 50 percent of shares Genciu Nafta, claimed that the Lithuanian side failed to keep to a clause in Genciu Nafta's Articles of Incorporation, which provided for joint operation by Genciu Nafta and Geonafta of the Kretinga and Nausodis oil fields in western Lithuania.
(Verslo Zinios, Lietuvos Zinios)

Lithuania’s milk industry leaders might merge
UAB Hermis Fond_ Valdymas (HFV), which already controls one of the largest Lithuanian dairies AB Rokiskio Suris, plans to acquire AB Zemaitijos Pienas, another leader of the milk processing industry.
HFV might later merge the two companies in order to compete on level terms with the foreign milk companies in the European market. HFV does not disclose its plans but does not discard the possibility of AB Zemaitijos Pienas acquisition. Representatives of the HFV say a lot depends on the position of the Competition Council.
The merge of the two companies would allow both of them to concentrate on separate fields and avoid unwanted competition. Zemaitijos Pienas would concentrate on the production of fresh milk, while Rokiskio Suris would produce cheese.
Competition Council says the merge of the two dairies would be impossible before May 1. However, the Council is ready to discuss the possibility of the merger again after Lithuania joins the European Union.
(Verslo Zinios)

Rytu Skirstomieji Tinklai earned LTL 24 million
Lithuania's power distribution company Rytu Skirstomieji Tinklai (RST) has announced a pretax profit of LTL 24 million for 2003, down by 8 percent from a pretax profit of LTL 26.1 million for 2002.
The company said it met its profit target for 2003. Its revenues for the full year 2003 reached LTL 704.1 million, up from revenues of LTL 667.7 million for 2002.
Estonia's state-run energy company Eesti Energia is the only remaining bidder in the RST privatization process, which has been put on hold since last December. The Estonians have bid over LTL 500 million for a 71.35 percent equity stake in the Lithuanian power distributor.
(Verslo Zinios, Lietuvos Zinios)

Thursday, 12th of February

Two potential buyers will compete for NSEL
A consortium of Warsaw stock exchange, Polish Central Securities Depository and Euronext, the alliance of European stock exchanges, has joined the list of contenders for the National Stock Exchange of Lithuania (NSEL).
OMHEX, the largest operator of Nordic stock exchanges and the owner of Finnish, Estonia's and Latvia's stock exchanges and depositories as well as the Swedish stock exchange, has already confirmed its intentions to compete for stakes in NSEL and CSDL.
The majority holding of 54.47 percent in the NSEL may be acquired in a package with a 32 percent stake in CSDL. The authorities expect to rake in at least LTL 7.45 million for the holdings.
The starting price for the 54.47 percent stake in the NSEL is LTL 3.35 million, or LTL 25,000 per share with a face value of LTL 15,000. The starting price of the 32 percent stake in the CSDL is LTL 4.1 million.
(Respublika, Lietuvos Rytas, Verslo Zinios)

Nevezis has not been able to establish its trademark in Europe yet
Knitwear company AB Nevezis has not been able to establish its trademark in Europe yet and still receives most of its revenues from sewing services.
Ruta Misiuniene, CEO of the company, says European manufacturers have extremely strong positions in the market and AB Nevezis finds it exceptionally difficult to compete. Misiuniene also sees a very serious problem in Lithuania – lack of talented designers, who could create a line for a common customer.
Despite the failure, the Lithuanian company intends to keep on trying and will export the first examples of its production to Scandinavia. The Panevezys-based company will also pay more attention to the participation in exhibitions.
Nevezis exports 97 percent of its production. The company’s main partners are in Sweden and Denmark, where the company exports 60 percent of the production.
(Verslo Zinios)

Parking company might lodge a claim with the local authority of VilniusLast year, Lithuanian extracted Baltijos Parkingas (Baltic Parking), a subsidiary of Norway's Parkerings-Compagniet, intends to lodge a claim with the local authority of Vilnius, demanding some LTL 20 million in damages.
The city council of Vilnius decided to terminate its agreement with a consortium of Baltijos Parkingas (Baltic Parking) and Egapris on operation of parking lots in Lithuania's capital city, effective from March 1. The agreement, which was signed in late 1999, granted the companies the monopoly right to operate paid-parking lots in Vilnius.
Jovitas Elzbergas, director of law department at the city council of Vilnius, slammed the amount of damages as exaggerated, pointing out that the damages might not exceed LTL 10 million.
According to preliminary data, Baltijos Parkingas earned LTL 634,000 in profit on revenues of LTL 4.88 million in 2003.
(Lietuvos Zinios, Verslo Zinios)

Wednesday, 11th of February

English standard opened the market
Prienai-based UAB Rudupis invested into the production of the English-style windows and found a way into the British market immediately. The new product allowed the company to increase its export volumes 9-fold.
UAB Rudupis invested LTL 0.5 million into the production line for English windows, while the sales of the company in Great Britain reached LTL 1.62 million.
Incited by the success, the Lithuanian company will soon open its office in London, which should facilitate the search of new customers in Britain.
Rudupis also exports its production to Russia, Armenia, Tajikistan and Germany. The company expects its export to reach LTL 5 million this year.
(Verslo Zinios)

Western furniture makers are faithful to IKEA
Furniture making companies owned by the Western Wood Group (WWG) grew by 12 percent last year. The group exports 90 percent of its production, while 60 percent of the exported furniture is sold to the Swedish company IKEA.
The group plans to reach the growth of 35 percent this year. The most impressive growth of 100 percent is planned for Silute-based Baldistra, which makes furniture for children. Baldistra sells 70 percent of furniture in Great Britain. The remaining part is exported to Denmark, Germany and Sweden. The company plans to increase the number of employees to 260 this year.
Giriu Bizonas, another company member of the WWG, will start making furniture for IKEA this year. The new factory should be opened in August and will employ up to 200 people. The group plans to open a new factory in Kaliningrad as well. The factory will make furniture for the Russian market.
Nerijus Tilindis, chief executive of WWG, says the group’s modern companies can offer the high quality and good prices that allow competing in the Western European market.
(Verslo Zinios)

Lithuania to have more influence in Nordic Investment Bank
Lithuanian joins the Nordic Investment Bank (NIB) on February 11. The Finance Minister of Lithuania Dalia Grybauskait_ and the president of Nordic Investment Bank (NIB) Jon Sigurdsson will sign the agreement on Wednesday.
"The invitation to participate in the activities of NIB means the recognition of Lithuania as a strong partner. The membership will expand Lithuania’s influence in international financial institutions and will have a positive impact on the country’s economy," Grybauskait_ said.
Lithuania, as a member of NIB, will be able to get cheaper loans from the bank, while the private sector will benefit from the loans without state guarantee.
Current shareholders of the bank are Sweden, Denmark, Finland, Norway and Iceland.
(Verslo Zinios)

Tuesday, 10th of February

SBA group companies exceed target plans
The consolidated turnover of the Lithuanian textile companies controlled by SBA concern declined by 7 percent in January year-on-year. Meanwhile, the sales of furniture making companies owned by the concern grew by 14.6 percent.
SBA concern owns three textile companies – Utenos Trikotazas, Satrija and Justima. Their aggregated sales for January stand at LTL 15.268 million. The concern expected the three companies to reach the mark of LTL 14.807 million in January.
AB Utenos Trikotazas saw its January sales decline by 2.9 percent to LTL 12.061 million but the target plan was exceeded by 3.4 percent.
The consolidated turnover of SBA furniture making companies was LTL 23.879 million in January. It is an increase of 14.6 percent compared to the same period last year. The target turnover was LTL 23.903 million.
(Verslo Zinios)

Pieno Zvaigzdes counts profit
Pieno Zvaigzdes, one of Lithuania's leading dairy groups, posted an unaudited net profit of LTL 13.1 million for 2003, as its consolidated full-year sales rose by 6.3 percent to LTL 374 million.
The group, however, missed its 2003 consolidated sales target of LTL 396 million.
Pieno Zvaigzdes and Panevezio Pienas, a dairy controlled by the group, reported consolidated sales of LTL 351.8 million for 2002, under the Lithuanian accounting standards. The group had a loss of LTL 3.3 million for the year.
The investments of the group reached around LTL 100 million over the past two years, of which LTL 45 million was invested last year. This places the group in a position to compete in the EU market.
(Verslo Zinios)

Sales of power grid operator declined in 2003
Vakaru Skirstomieji Tinklai (VST), Western Lithuania's power grid operator, which changed owners in late 2003, reported pretax earnings of LTL 23 million for the full year 2003, a decline of 24.6 percent from 2002 when the company announced a pretax profit of LTL 30.502 million.
The company expected to rake in pretax earnings of LTL 35 million for 2003.
Revenues on sales of electricity notched up by 5.5 percent, to LTL 689.5 million from LTL 653.578 million reported for 2002.
NDX Energija, a company set up by owners of VP Market, the largest retailer in the Baltics, bought a 77 percent stake in VST from the Lithuanian state in a LTL 539.845 million deal.
VST supplies electricity to over 656,000 consumers in the regions of Kaunas, Klaipeda and Siauliai. (Lietuvos Zinios)

Monday, 9th of February

Zara is almost in Lithuania
Spanish clothing retailer Zara will choose Lithuanian retail company Apranga as its partner in Lithuania, Latvia and Estonia. Sources say the deal will be finalized and officially announced later this week.
Market experts claim Zara is the clear leader of the European clothing market. Its inexpensive and fashionable products are popular in all markets. The chain previously thought the Baltic market is too small for the giant but changed its plans afterwards.
Inditex, which own Zara brand name, sells clothes in 1,900 stores in 48 countries. The company opened 360 new stores last year. Zara makes 80 percent of the clothes in Europe, mostly in Spain.
AB Apranga plans to increase its sales by 40 percent in Lithuania and Latvia this year, as well as to open 10 new stores.
(Verslo Zinios)

Ecological bread for export
Lithuanian bakery Saimeta plans to start exporting ecological brown bread. Such bread is not popular in Lithuania but foreign customers are willing to pay more for the more expensive product.
Saimeta will exhibit its production at the international exhibition Prodexpo 2004 in Moscow. It has already been presented in Gruene Woche 2004 events in Berlin.
Vida Stankeviciene, owner of Saimeta, says the company has recently started using new packaging. The special bags made in Germany prolong the bread sales term from 10 days to 2 months. The new package will make bread a little more expensive.
UAB Akmenes Duona is another player in the market of ecological bread. The company expects to start the export of such bread to Poland in May. Ecological bread accounts for 7 percent of the company’s products.
(Verslo Zinios)

Request of Vilniaus Vingis satisfied by the European Commission
Lithuania's Vilniaus Vingis has persuaded the European Commission to impose customs duties on the import of flyback transformers and deflection yokes from third countries.
Vilniaus Vingis is one of Europe's leading producers of deflection yokes for picture tubes with a one-fourth market share. It also manufactures flyback transformers for TV sets.
According to the Commission decision, effective from July 1, 2004, a 3.7 percent duty will apply to flyback transformer imports from third countries, while deflection yoke imports will be taxed at a 2.7 percent rate.
Vilniaus Vingis also submitted four requests for suspension of customs duties on the import of raw materials, used in the production of deflection yokes and flyback transformers, from third countries.
(Verslo Zinios)

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