Observer "Lietuva"

WEEK 11.2005

Saturday, 19th of March

Achema Group invested LTL 130 million
Achema Group, the leading Lithuania's industrial group, invested LTL 30 million into its companies last year, a decline of 12.2 percent from the investments of LTL 148 million a year earlier. The group, which is controlled by Chairman of Lithuania's Confederation of Industrialists Bronislovas Lubys, has said in its website that investments into logistics, at LTL 60 million, accounted for almost a half of total investments. Investments into chemistry business made up LTL 45.5 million last year. In 2005, the group intends to invest into diversification of its chemistry portfolio, logistics and other sectors. Achema, the fertilizer producer controlled by the group, is due to launch its 3-year investment program worth LTL 200 million later this year. Backed by foreign partners, the company is building a liquid fertilizer terminal in Gent, Belgium, which should be put on line in November. In May or June the Achema Group and Kroviniu Terminalas, a local terminal operator, are due to inaugurate a new LTL 90 million worth petrochemicals terminal with the design capacities of 2 million tons per year.
Lietuvos Zinios

RST to increase authorized capital
Rytu Skirstomieji Tinklai (RST), a power network operator supplying electricity to nearly half of Lithuania, unveiled its plans to boost the authorised capital through non-monetary contributions. The general meeting of stockholders due on April 28 is to hold a vote over the priority right to the owners to acquire the new shares, the statement by the company read. Besides, the board of directors is to present for the approval of the stockholders the financial accounts of the company and the financial loss, which accumulated because of the revaluation of the assets. Presently, the value of the RST assets amount to LTL 60.1 million. The new shares could be used by the operator to pay the sellers of the in-kind contributions, upon their wish. RST reported a LTL 101.4 million pre-tax loss.
Lietuvos Zinios

Businesspeople support euro adoption
Majority of Lithuania's corporate leaders favour prospective introduction of euro, which, in their opinion, will simplify settlements with the EU member states. Executives of manufacturing and large-scale companies favour the entry into euro zone the most, the latest survey commissioned by the Bank of Lithuania to the public opinion and market surveyor Baltijos Tyrimai has shown. Introduction of euro is favoured by 66 percent of corporate leaders in seven major Lithuania's cities. About 25 percent sounded sceptical of Lithuania's euro zone entry, however. About 78 percent executives in companies with a workforce of 50 and more support the shift to single currency. Moreover, euro introduction is favoured by 66 percent of mid-scale corporate executives and 59 percent of small business leaders.
Respublika, Lietuvos Rytas

Friday, 18th of March

Lithuanian Energy to launch online power trade
Lietuvos Energija (Lithuanian Energy), the state-owned power transmission company, has announced plans to launch an electronic system to sell and buy electricity in Latvia and Estonia by the end of this year. "This will mark the complete opening of our market to Latvia and Estonia. However, our markets are relatively small. This market will be fully functioning when power grid connections with Poland, Sweden and Finland are in place," Lietuvos Energija CEO Rymantas Juozaitis said. He said this would be the first real step toward creating a common electricity market across the Baltics.
The Lithuanian electricity market has been fully opened to competition since the start of this year. All legal entities can buy power from any of 17 independent suppliers. Lithuania participates in 3 major power grid connection projects: a EUR 434-million power link with Poland, a EUR 400-million link between Lithuania and Sweden, SwindLit, and a EUR 110-million link between Estonia and Finland, Estlink.
Lietuvos Zinios, Respublika, Lietuvos Rytas

Farmers will be able to produce energy
Technogama, Lithuania's electronics design and manufacturing company, intends to launch manufacturing of small wind turbines designated for farmers in Lithuania and neighbouring countries. Prospective output will reach 50 units in 2005. Next year, the output should rise to 200, while in the third year the company expects to manufacture 500 wind turbines with capacity up to 10 kW. Lithuania-made wind turbines would be targeted for farm needs. Farmers with surplus power could sell that volume to the state.
Baltic countries and the neighbouring states have not launched the manufacturing of wind turbines so far, and Technogama expects to ship its products to Latvia, Estonia, Poland and other countries. The company would attempt to get some support from the EU funds.
Lietuvos Rytas, Respublika

Sales of Norfa came in at LTL 138.5 million
The sales of Norfos Mazmena, the third largest retail network by turnover in Lithuania, amounted to LTL 138.5 million in the first two months of 2005, up from LTL 104.836 million in the same period last year. According to Dainius Dundulis, the chairman of the board of Norfos Mazmena, the good results were brought about by the improved quality of services, an effective discount system, and unchanged prices. He says that optimal ratio of price and goods quality is set in the stores of the chain.
In 2005, the company hopes to increase turnover to LTL 1 billion. Norfos Mazmena currently owns 93 stores.
Verslo Zinios

Thursday, 17th of March

Lietuvos Dujos might boost natural gas prices
The revaluation of the assets of Lietuvos Duos, Lithuania's leading importer and distributor of natural gas, may send the natural gas prices for local population up from July 1. "The revaluation may have effect on the gas prices first of all because of an increase in depreciation costs. However, they must be co-ordinated with our commission," Vidmantas Jankauskas, the head of the State Commission for the Control of prices and Power, said.
After the revaluation, the value of the long-term assets of the facility went up 3.4 times to LTL 2.07 billion. The revaluation was carried for harmonising the accounting of the company with the internationally accepted standards, which request to account the assets based on the real value.
The new gas prices, according to the official, can come into force on July 1, the day for revaluation of transportation tariffs for natural gas. Meanwhile, he said, the prices set by Gazprom, may go down.
Lietuvos Rytas, Verslo Zinios

Jump of Vakaru Laivu Gamykla
Vakaru Laivu Gamykla (Western Shipyard or VLG), Lithuania's largest shipbuilding, repairing and metal processing group, boosted sales to LTL 166.743 million in 2004, up by 184.31 percent in 2003. Estonia's BLRT Group holds a 92.81 percent stake in VLG, which is comprised of 19 enterprises operating in shipbuilding and repairing, stevedoring, metal processing and other business areas. VLG employs a workforce of 1,400. VLG, which had focused on construction of ship hulls for five years, started building ships last year. It has also established itself as one of the best steel processing companies in Europe.
Verslo Zinios

Snaige will drive through duties from Kaliningrad
Lithuania's Snaige, the only refrigerator manufacturer in the Baltics, claims to suffer no impact on anticipated Ukraine's decision to raise the duties on refrigerator imports from the EU member states to 10 percent, from current 5 percent. "In fact it will not affect us as we have a plant in Kaliningrad, and exports from Russia to Ukraine carry a zero duty. Thus, sales from our Kaliningrad facility will be more advantageous, compared with our plant in Alytus," Mindaugas Sestokas, Snaige CEO, said.
He dismissed media reports that the company would lose some LTL 4-5 million owing to higher duties. So far shipments from Snaige's plant in Kaliningrad to Ukraine had not been launched due to logistics, production scheduling and some other circumstances.
Last year Snaige's sales at Ukraine made up some 160,000 refrigerators under Snaige and General Frost brands. In 2005, the sales volumes should grow, Sestokas said.
Meanwhile, Snaige is projecting aggressive growth in Russia, where the company intends to boost its market share to 10 percent in 2005 and to 20 percent in several years' time.
Verslo Zinios

Wednesday, 16th of March

VP Market opened new store in Romania
VP Market, the operator of the largest Baltic retail chain, has opened its seventh store Albinuta in Romania's capital Bucharest on Tuesday. "We will open three more stores in Bucharest in the nearest term. In future we will enter other cities in that country as we intend to become a solid player on Romania's retail market," Ignas Staskevicius, VP Market chairman, said.
VP Market entered Romania's food retail market late in 2004. All Albinuta stores, which are analogous to Lithuania's discount stores Saulute, have been opened in Bucharest.
For the first two months of 2005 the company posted sales of LTL 734.02 million in four countries, a rise of 19.2 percent from the sales of LTL 615.6 million in the January-to-February period of 2004.
VP Market currently operates 195 stores in Lithuania, 88 retail outlets in Latvia, 14 in Estonia and 7 in Romania. In 2005 the chain is projecting to open about 100 new retail centres.
Respublika, Lietuvos Rytas

Shadow economy rooted in Lithuania
Lithuania's shadow economy accounts for about 18.9 percent of the gross domestic product (GDP), with more than half of underground income generated in the retail, construction and industrial sectors, a survey by the Statistics Department showed.
"Based on 2002 data, the value-added generated by the unaccounted economy, not taking into account illegal activities, reached LTL 9.582 billion," Algirdas Semeta, director general of the department, said.
He said illegal production and distribution of alcohol, narcotics, sex services and dealing in stolen cars generated another LTL 650 million in income. The value-added created from illegal activities would account for 0.9 percent of the 2002 GDP. The retail sector accounted for the largest share of the underground economy, LTL 2.919 billion. Industry's share of the shadow economy was LTL 1.760 billion, while the construction sector's share was LTL 1.404 billion.
Lietuvos Rytas, Lietuvos Zinios, Respublika, Verslo Zinios

Utenos Trikotazas will allot LTL 17.85 million for dividends
Utenos Trikotazas, Lithuania's leading knitwear manufacturer, intends to offer its shareholders LTL 17.851 million or LTL 0.9 per share, in dividends for 2004. Shareholders of the knitwear company, which is controlled by multi-business group SBA, will consider the dividend proposal at the upcoming annual meeting. Utenos Trikotazas group posted LTL 10.032 million in net consolidated earnings for full 2004, a decline of 23.8 percent from the year-earlier figure of LTL 13.161 million. The company's turnover declined by 3.3 percent, to LTL 129.794 million last year. The sales by the whole group slipped by 3.4 percent, year-on-year, to LTL 174.691 million.
Verslo Zinios, Lietuvos Rytas

Tuesday, 15th of March

SBA Baldu Kompanija set up new plant together with Germans
Lithuania's multi-business concern SBA, the owner of Klaipedos Baldai, the largest domestic furniture producer, has joined forces with Germany's furniture producer Germania to establish a joint venture SBA-Germania, which will manufacture furniture with rigid synthetic film covering in Silute, Western Lithuania.
SBA Baldu Kompanija, the furniture arm of the concern, has already invested over LTL 10 million into the project. Subsequent investments will be pro-rated to the holdings of the Lithuanian concern and Germania.
"The new facility is expected to yield the first products in June or July," Ricardas Kiaurakis, SBA Baldu Kompanija CEO, said.
In 2005 the output should exceed LTL 5 million, while in 2006 manufacturing capacities would surge to LTL 25 million.
Respublika, Lietuvos Rytas, Verslo Zinios, Lietuvos Zinios

Preference for Lithuanian production
Almost three-fourths of the Lithuanian population prefer locally produced food to imported food, the poll by the market research group RAIT has revealed. Some 71.7 percent of those polled said that whether or not a food product was made in Lithuania did influence their decision to buy that product. Some 10.7 percent indicated a neutral attitude toward the origin of products, and 17.4 percent said it was not at all important whether a product was produced in Lithuania. As to manufactured goods, only 32.8 percent of those polled said that they preferred domestic products to imports. A larger percentage of respondents, 43.6 percent, said they did not care if a product was made in Lithuania, and 23.2 said that it was neither important nor unimportant. Among those who prefer domestic food to imports, 60.9 percent said that Lithuanian products were of higher quality, 35.6 percent said they wanted to support local producers, 11.5 percent said that local products were cheaper, and 2.2 percent said that they were environmentally safer.
Respublika, Verslo Zinios

Turnover of Gubernija surges
Gubernija, a major Lithuanian beer producer, posted revenues of LTL 6.1 million for the first two months of 2005, a rise of 5.3 percent year-on-year. Siauliai-based company announced that total sales for the two months increased by 10.5 percent year-on-year to LTL 3.52 million litres. Gubernija posted preliminary losses of LTL 4.859 million for 2004, up from losses of LTL 1.476 million in 2003. Turnover of the company declined by 8.7 percent to LTL 50.369 million in 2004 since the previous year.
Lietuvos Zinios, Verslo Zinios, Respublika

Monday, 14th of March

Cable will join Sweden and Lithuania
The project on connecting the Lithuanian and Swedish power systems, referred to as SwindLit, may cost almost LTL 1.38 billion. The project estimate has been prepared in a study worked out by some Lithuanian ad Swedish companies and institutions. The project financing sources however have not been identified yet. Nevertheless, the project is expected to be completed by 2009.
"As the project is to include a complex of the wind mill of 300 MW in the Baltic Sea on the Sweden's side and the opportunity to use the capacity of the hydro plant in Kruonis is under consideration presently, SwindLit must be a very attractive and raise big interest among investors," Economy Ministry Viktoras Uspaskich said.
Lietuvos Zinios, Verslo Zinios

TV set sales of LTL 500 million
Siauliu Tauro Televizoriai (STT), the sole manufacturer of TV sets in Lithuania, expects its sales to go up by 49 percent to LTL 500 million in 2005 while the sales should increase by 43 percent since the previous year. STT plans to manufacture about 1.8 million TV sets. STT sales in 2004 increased 55.5 percent to LTL 335.46 million. The company sold 1.256 million TV sets, 1.8 times more than it sold in 2003. The company has recently been investing in the production of TV sets with liquid crystal displays. According to preliminary calculations, STT sold 220,770 units of TV sets in January-to-February 2005, an increase of 33.1 percent year-on-year (165,860), while the sales soared by 26 percent up to LTL 57.899 million.
Verslo Zinios

GDP increased almost 7 percent
Lithuania's gross domestic product (GDP) grew by 6.7 pct in 2004 to reach LTL 61.908 billion, according to revised estimates released by the Statistics Department. In the fourth quarter of 2004, GDP also grew by 6.7 percent, year-on-year, to LTL 16.883 billion. GDP per capita rose by 7.2 percent last year to LTL 18,019. The Statistics Department said it had revised its GDP fourth-quarter growth estimate to reflect additional statistical data on road freight volumes, service volumes, financial and fiscal indicators, and export and import volumes, etc.
Verslo Zinios

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