Observer "Lietuva"
WEEK 8th 2004

Saturday, 21st of February

Compulsory insurance market shrinks in Lithuania
Lithuania's compulsory motor third-party liability insurance market shrank by 21.5 percent, year-on-year, to LTL 11.216 million in January, preliminary data released by the country's Insurance Supervisory Commission has shown.
Lithuanian insurers paid out a total of LTL 5 million in compulsory motor insurance claims in January, down by 12.1 percent on the same time last year.
The compulsory motor third party liability insurance covered 959,700 vehicles as of late January, a 4.4 percent decline on a month-on-month basis.
Lietuvos Draudimas (Lithuanian Insurance), the country's leading insurance group, had a 30.6 percent share of the compulsory auto insurance market last month with recorded written premiums of LTL 3.437 million.
Lithuanian insurers providing compulsory motor insurance coverage recorded total written premiums of LTL 189.4 million for 2003, a 21.9 percent decline over the previous year.
(Lietuvos Zinios)

Lithuanian leasing market is expected to grow by 30 percent in 2004
Lithuanian Leasing Association forecasts that local leasing market will grow about 30 percent in 2004 in terms of leasing portfolio. Lithuanian leasing market grew by 47.8 percent last year.
"The prospect has been made with respect to the overall banking context as well the growth of country’s economy and gross domestic product," Pranci_kus Gerulis, president of the national leasing association, said. However, the growth is expected to be a little slower compared to last year, due top the amendments to the VAT law. Under the amendments, customers have to pay the full VAT tax at the time of the purchase.
With increasing competition, market shares of the most leasing companies changed last year. The largest share was taken by VB Lizingas (36.21 percent), followed by Hanza Lizingas (35.9 percent), Sampo Lizingas (5.66 percent), Snoro Lizingas (5.46 percent) and Nord/LB Lizingas (5.15 percent).

Lithuania to float Eurobond issue
Lithuanian government will float a new nine-year EUR 600 million issue of Eurobonds on foreign markets on February 27, with international investment banks Citigroup and UBS chosen as lead managers.
The roadshow of the issue, to be presented by minister of finance Dalia Grybauskaite and other ministry representatives, will be held next week at major European financial centres, including London, Amsterdam, Zurich, Frankfurt, Athens, Helsinki and Copenhagen.
New bonds would be added to the EUR 400 million issue of ten-year Eurobonds placed in 2003 with interest of 4.5 percent.
With stronger Lithuania's credit standing seen as a major stimulus for foreign investors, the new issue is expected to match the success of last year issue, which saw the demand exceeding the supply almost twofold.
Receipts on the issue will be channelled for redemption of matured securities, refinancing of loans and coverage of budget deficit.

Friday, 20th of February

Latvia saved Lithuania from gas crisis
Russia renewed the supply of natural gas to Lithuania via Belarus with almost a day having passed since the suspension of supply. The supply of natural gas should reach regular level in 24 hours.
On Wednesday Trans Nafta, controlled by Russia's Gazprom terminated the supply of natural gas to Belarus, which, however, used the fuel pumped via the territory of the country to Lithuania, Kaliningrad, Poland and Germany, prompting Gazprom to cut the transit of natural gas via Belarus' territory short.
Due to the shortage of natural gas, Lithuania's leading industrial companies, relying heavily on the supply of natural gas, had to trim capacities to the minimum on Thursday. Upon suspension of supply of Russia's natural gas to Belarus and termination of gas transit via the territory of the country on Wednesday night, Lithuania shifted to the supply of gas from Latvia, with imports shrinking to about one-third of gas demand.
(Verslo Zinios, Lietuvos Rytas, Lietuvos Zinios, Respublika)

Marijampoles Pieno Konservai is gaining speed
Marijampoles Pieno Konservai, the leading Lithuania's canned milk producer, gears up to double sales, with turnover hitting LTL 150 million in 2004. The company has been operating with full capacity since January 1, processing some 250-300 tons of milk per day. The output of milk powder and butter should rise fourfold, year-on-year, to LTL 69.06 million in 2004.
The company, which is among the largest producers in South-Western Lithuania, channels some 95 percent of total output for exports. The list of key export markets should not change, with the main partners being African countries, Russia, Middle East and European countries.
In 2003 the canned milk producer raised exports 2.5-fold, to LTL 45 million. Some 40 percent of the output was marketed in African countries, 30 percent - in the European Union. Moreover, the products of the company reached the shelves of stores in South-Eastern Asia, Middle East countries.
Investments into upgrade of plant equipment should reach some 10-15 million litas in 2004, however, the total amount may rise to LTL 30 million with the assistance of European Union funds.
(Verslo Zinios)

Viciunai Ir Partneriai can export to the European Union
The new fish processing plant UAB Viciunai Ir Partneriai, member of Viciunai group, complies with the requirements of the European Union and can export its production to the EU countries. The company produces frozen, smoked and salted fish, as well as its products.
The investments into the new plant and equipment stand at LTL 15 million. LTL 4.5 million for the project has been received from the SAPARD program.
The company, which employs 440 people, sells its production in the Baltics, Russia, Ukraine, Czech Republic, Slovakia and the United States.
Only 16 Lithuanian companies have permits to export their production to the European Union countries.
(Verslo Zinios, Lietuvos Rytas)

Thursday, 19th of February

Rokiskio Suris expects to boost exports
Rokiskio Suris, Lithuania's largest dairy producer, is projecting sales of over LTL 400 million for the full year 2004 on expectations to boost exports to the EU markets.
Dalius Trumpa, Rokiskio Suris' production director, said in a news conference on Wednesday that the company aimed to achieve a 12.9 percent growth in total exports in 2004, to LTL 229 million from LTL 202.8 million in 2003.
Rokiskio Suris' cheese exports to the US market, which has become unprofitable for the Lithuanian producer due to the dollar's slide against the litas, should decrease to LTL 15 million this year, from LTL 79.8 million in 2003, while lactose exports to Japan are expected to remain close at last year's level of LTL 1.057 million.
Exports accounted for around 60 percent of Rokiskio Suris' total production output in 2003, with the EU markets being the main export destination for its products.
(Verslo Zinios)

Turnover of linen yarn producer up by 70 percent
Lithuanian producer of linen yarn UAB Lietlinen reported annual sales of LTL 50.6 million, which is an increase of 69.4 percent compared to 2002. The main reason for such a growth rate is a double increase of production capacity. The company expects to grow at a more modest rate this year.
Kaunas-based company Lietlinen is owned by the Italian company Linifico e Canapificio Nationale, which is controlled by the Italian concern Marzotto. The Italians have already invested LTL 39 million into the Lithuanian company. No more significant investments are planned in the nearest future.
The company is now working on a plan to substitute the flax imported from France, Holland and Belgium with the one grown in Lithuania. The company expects to increase the percent of processed flaxed grown in Lithuania to 1 percent this year. The target turnover of UAB Lietlinen this year is set at LTL 52 million.
(Verslo Zinios)

LTL 42 million to be invested into a new water park
Lithuania's multi-business group Rubikon has announced plans to invest around LTL 42 million in a new water park in Vilnius slated to open in August 2005.
The water park project was unveiled at a news conference on Wednesday by Darius Lescinskas, who is chairman of the board at Ogmios Astra Pramogu Centras (Ogmios Astra Entertainment Center), Ron Odermatt, a co-owner of IWM and WhiteWater, and Julius Dovidonis, OAPC managing director. OAPC is a member of the Rubikon Group.
It is planned that the project's design will take around three months to complete and then construction will take about a year.
The water park concept has been developed in cooperation with the project partners, including the Swiss-based company International Waterpark Management (IWM).
Under the plan, the 9,500-square-meter entertainment complex in Vilnius will have a capacity for over 1,500 people at a time, or some 350,000 visitors per year. The water park will have artificial rivers, wave pools, and seven waterslides varying in height from 20 meters to 123 meters.
(Kauno Diena, Lietuvos Rytas)

Wednesday, 18th of February

New car sales on the rise
Lithuania's new car sales reached 854 units in January, up by 38.4 percent from 617 units in the same period a year ago, according to data released by the market research company AutoTyrimai.
Some 98.6 percent (842 units) of all new cars sold last month were registered in Lithuania.
The French group Renault led other carmakers in terms of Lithuanian sales in January, with 108 new cars sold during the month. Japan's Toyota was second with 92 cars sold, followed by Peugeot, another French carmaker, with 83 cars.
Renault Megane was the best-selling model in Lithuania in January, with 53 new cars sold, followed by Toyota Avensis (29) and Renault Scenic (26).
Lithuania's new car sales declined by 0.06 percent to 10,352 units in 2003, from 10,358 new cars sold in 2002.
(Respublika, Verslo Zinios)

Profit of Ekranas grows
Lithuania's colour picture tube manufacturer Ekranas has announced an unaudited net profit of LTL 21.7 million for 2003, up by 76.4 percent from a net profit of LTL 12.3 million for 2002.
Ekranas has released preliminary figures showing that its revenues for the full year 2003 grew by 10.2 percent to LTL 465 million, from revenues of LTL 422 million in 2002.
The TV tube manufacturer, which is based in Panevezys has said it is projecting a pretax profit of up to LTL 35 million on sales of LTL 560 million for 2004.
Ekranas' aims to boost its production output to between 4.5 million and 5.1 million units this year, including at least 1 million units of 15-inch true flat screen TV tubes. The company will also launch a new production line in August this year, which should increase its capacity to 6.8-7.1 million tubes per year.
Shareholders of Ekranas say that the launch of the new production line should further strengthen the company’s chances to reach their main goal – overtake the Dutch company Philips in the market.
(Respublika, Verslo Zinios, Lietuvos Rytas)

Low fare airlines bypass Lithuania
Lithuanian air space will be liberalized in May this year. The liberalization should stiffen the competition among air companies currently operating in Lithuania. However, the long-awaited arrival of low fare airlines might have to wait.
Italian Alisea Airlines is about the only company interested in starting flights to Lithuania after its market is liberalized. Other airlines are taking a reserved approach and do not disclose their plans yet. The Irish company Ryanair, which has already announced its plans to start flying to one of the three Baltic countries from May, is expected to choose Latvia over Lithuania. It would be a blow to Kaunas airport, the second largest in the country, which expected to lure Ryanair to Lithuania. Easyjet, another popular low fare airline has already crossed Lithuania out of its plans due to a rather small market.
Lithuanian tourism experts think the arrival of low fare airlines would be a boost for the whole tourism market. They say that one of the main problems that impedes the development of tourism in Lithuania is a rather costly air travelling.
(Verslo Zinios)

Tuesday, 17th of February

Utenos Elektrotechnika posts excellent results
AB Utenos Elektrotechnika reported a turnover of LTL 7.4 million for 2003. It is an increase of almost 25 percent compared to 2002. The growth of the company was mainly influence by the export to Western European countries.
AB Utenos Elektrotechnika is well known in Lithuania and former countries of the Soviet Union for its hand-dryers Vejelis. The company started the production of the legendary driers in 1965.
Arturas Jereminas, CEO of Utenos Elektrotechnika, says the company managed to raise its export level from zero to 23 percent last year. The company established a separate department, which is responsible for communications with the Western partners.
(Verslo Zinios)

New company in Klaipeda FEZ
Another company announced its plans to build a factory in Klaipeda’s free economic zone. UAB Vakaru Nafta, which represents Russian company Omsk Chimkompanija, plans to start production of disposable utensils, packing materials and package in the free economic zone. Investments into the factory are expected to reach LTL 15 million. The new factory should create 60 new work places.
The construction of the factory will start in June and it should be launched at the end of the year or in early 2005. The company targets Baltic, Belarusian and Russian markets first of all.
The factory will buy raw material from the Russian company Omskij Polisterol. It is the largest chemical factory in Russia.
Omsk Chimkompanija owns similar factory in Slovakia and plans to build another one in Switzerland.
(Verslo Zinios)

Radical measures for bank control
The law, which regulates the operations of the Lithuanian commercial banks, is about to be replaced by a new one. The bill prepared by the Ministry of Finance provides a possibility to nationalize shares of a bank in case of a danger for the bank’s reliability and safety.
Experts and representatives of the banks criticize the project, although its authors say it is based on the legislation of the European Union.
However, Andrius Bogdanovi_ius, expert of the Lithuanian Free Market Institute, says the possibility to nationalize the shares is not present in the legislation of the European Union.
Eduardas Vilkelis, president of the Association of the Lithuanian Banks, says the provision that allows the state to take over the shares of a bank is not concrete. He thinks the law should provide clear guidelines how and when the shares can be nationalized.
Eduardas Vilkelis and representative of Snoras bank Au_ra I_ickien_ think the new law contradicts with the Constitution, which guarantees the immunity of private property.

Previous weeks:
Back to
Baltic Weekly MonitorA

 TERMS & CONDITIONS / KÄYTTÖOIKEUDET. © Oy Compiler Ab. All rights reserved.