Observer "Lietuva"

WEEK 14.2005

Saturday, 9th of April

LTL 412.5 million over the first quarter of 2005
In the first quarter of 2005, Lithuania signed 300 agreements for assistance from EU structural funds. Counting EU assistance and co-financing from the Lithuanian national budget the value of the contract amounts to LTL 412.5 million. In January-February this year, project managers submitted 653 applications worth LTL 1.46 billion for EU assistance, but only 308 of them worth LTL 419 million were accepted. Since joining the EU, Lithuania has signed a total of 380 contracts, the total value of which stands at LTL 830.2 million. Lithuanian project managers have already received LTL 79.7 million of this sum. The authorities are coordinating assistance for another 162 projects that have been accepted. The total value of these projects is LTL 466.9 million.
Kauno Diena, Respublika, Lietuvos Zinios

RST asks for EU assistance
Rytu Skirstomieji Tinklai (RST), which supplies electricity to nearly half of Lithuania, has applied for LTL 20 million from EU Structural Funds. The state-owned company expects to get LTL 10.815 million for the modernisation of transmission lines and related infrastructure in the district of Anyksciai in northern Lithuania, and LTL 8.767 million to upgrade the power infrastructure in the southern towns of Druskininkai and Liepkalnis, the Lithuanian Business Support Agency reported on Friday.
Lietuvos Zinios

Grigiskes will pay dividends
Grigiskes, Lithuania's leading hardboard and toilet paper producer, posted an audited profit of LTL 5.74 million in 2004 and intends to set aside LTL 2 million for a dividend payment or LTL 0.05 a share. Earlier this year, Grigiskes reported an unaudited pre-tax profit of LTL 8.1 million. The company said the financial result was reduced by LTL 916,000 due to losses suffered by Baltwood, its subsidiary. Lietuvos Zinios

Friday, 8th of April

Sales of beer go up
Lithuania's beer market grew by 6.5 percent to 45.25 million litres in the first quarter of 2005, compared with the same period in 2004. In March the breweries raised their aggregate domestic beer sales by 4.8 percent year-on-year to 18.62 million litres. Svyturys-Utenos Alus recorded a 3.4 percent growth in first-quarter beer sales to 22.65 million litres. Kalnapilis-Tauras Group was the second with 11.06 million litres, up by 5 percent year-on-year. Ragutis lifted beer sales by 9.1 percent to 5.17 million litres, while Gubernija posted a 7.4 percent rise in sales to 4.94 million litres. Svyturys-Utenos Alus held a 47 percent share of the domestic beer market in terms of first-quarter sales, followed by Kalnapilis-Tauras Group with 23 percent, Ragutis with 10.7 percent, and Gubernija with 10.3 percent.
Lithuanian beer exports reached 1.50 million litres in the first quarter of 2005, rising by 21 percent year-on-year. Svyturys-Utenos Alus saw its first-quarter exports drop by 1 percent year-on-year to 960,000 litres of beer. Kalnapilis-Tauras Group's beer exports almost trebled to 290,000 litres, while Gubernija's exports surged by 66.7 percent to 250,000 litres.
Lietuvos Zinios, Verslo Zinios, Lietuvos Rytas

Not enough funds for road maintenance
Traffic on Lithuanian roads has grown dramatically since the country joined the EU almost a year ago, but spending on road maintenance has not increased, road officials have said.
"The intensity of traffic on the Via Baltica highway from the direction of Poland has grown by as much as 42 percent since last May," Virgaudas Puodziukas, director general of the Lithuanian Road Administration, said.
It is believed that simplified procedures in place at Lithuanian border checkpoints since May 2004 had had the largest impact on the increase in transport flows. The government has earmarked LTL 834.9 million for the Road Maintenance and Development Program this year, 7.1 percent less than last year. Moreover, the program will lose an estimated LTL 430 million after the so-called "road tax" is abolished on July 1 of this year, while support funds from the EU cohesion and other structural funds will amount to only LTL 274 million.
Lietuvos Zinios

Flack plans to grow by 20 percent
Falck Baltics, the largest private security services group in the Baltic countries, posted LTL 54.9 million in turnover for full 2004, a rise of 28 percent from the year-earlier figure of LTL 42.9 million. Saulius Vincentas Tulevicius, Lithuania's Falck Security CEO, noted in particular that last year the company managed to exceed its performance targets in physical and technical security, money transportation and management, security system design, installation and maintenance areas. Falck Security expects to boost its turnover by 20 percent to LTL 65-67 million this year.
Falck Security, which operates subsidiaries in Lithuania, Latvia and Estonia, is a member of Group 4 Securicor, the world's second largest security services provider.
Verslo Zinios

Thursday, 7th of April

Turnover of VP Market surged by 21 percent over the quarter
VP Market, the largest retailer in the Baltics, achieved sales of LTL 1.142 billion in the three Baltic countries and Romania in the first quarter of 2005, a rise of 21 percent from sales of LTL 944.686 million a year ago. Ignas Staskevicius, VP Market board chairman, attributed the sales growth to a new pricing policy and the expansion of the chain.
"In February we dramatically cut prices throughout the chain. As a result of this, sales rose not only in the countries where we are opening new shopping centres, but also in Lithuania, where expansion is minimal at the moment," he said.
VP Market currently operates 195 stores in Lithuania, 88 in Latvia, 14 in Estonia and 7 in Romania. It plans to open about 100 new outlets this year, with planned investments of around 100 million euros. Four new T-Market stores are to open in Estonia this month.
Respublika, Lietuvos Rytas, Verlso Zinios

Lietuvos Gelezinkeliai carried more freight
The national railway company Lietuvos Gelezinkeliai has reported a 0.8 percent year-on-year increase in freight traffic from 11.54 million tons in 2004 to some 11.63 million tons, for the first three months of 2005. International freight volumes declined by 3 percent to approximately 8.7 million tons from 8.9 million tons last year, while local freight traffic surged by 13 percent, to reach 2.96 million tons.
Verslo Zinios

Dividends of Vilniaus Baldai
Vilniaus Baldai, a leading furniture producer of Lithuania, is going to pay dividends this year. The stockholders of the company have been recommended to approve a dividend portfolio of LTL 3.88 million, or LTL 1 a share. The shareholders are expected to vote on dividends and activity report for the previous year on April 22.
The furniture company estimates LTL 120 million worth of sales in 2005, which would exceed last year's sales by almost a fifth. The estimate for pre-tax profits this year is LTL 12 million.
Lietuvos Zinios, Lietuvos Rytas

Wednesday, 6th of April

Boom of trip sales in Lithuania
The sales of Novaturas, the biggest tour operator in the Baltic countries, nearly doubled in the first three months of 2005 compared to the first quarter of 2004 and amounted to LTL 22 million. Kestutis Liutkus, the marketing director of Novaturas, said that such good sales results in the first quarter are due to a boom in the purchase of travel packages this year. At the present time, nearly half of all the travel packages offered by Novaturas for the upcoming summer holidays have already been purchased. Novaturas has also started negotiations with airlines over extra flights to Anatolia, Tunisia, Croatia, and Bulgaria. Data compiled by the company show that about 35 percent of Lithuanians would like to travel to Turkish resorts, and 20 percent want to go to Tunisia and Bulgaria. In 2004, the sales of Novaturas in Lithuania grew 42 percent to LTL 74 million.
Respublika, Lietuvos Zinios, Verslo Zinios

Sanitas expects to get GMP certificate for drug production
Sanitas, Lithuania's biggest pharmaceutical producer controlled by investment company Invalda, hopes to be awarded with a Good Manufacturing Practice (GMP) certificate for the production of tablets in the nearest future. Water treatment and tablet drying installations required for the manufacturing of tablets would be arranged in approximately a week's time. Sanitas holds a GMP certificate for its injection preparations. The Kaunas-based pharmaceutical producer reported LTL 6.738 million in sales for the first 3 months of 2005, a plunge of 29.8 percent from the year-earlier figure of LTL 9.602 million. The company's sales in Lithuania edged down by 4.1 percent, year-on-year, to LTL 2.162 million, while exports plunged by 37.7 percent, to LTL 4.576 million, largely due to changes in the pricing system of Latvia's Grindeks, the major customer of Lithuanian pharmaceutical producer.
Kauno Diena, Verslo Zinios

Sales of Stumbras soar
Stumbras, the second largest Lithuania's distillery controlled by private concern MG Baltic, posted sales of LTL 22.275 million for the first three months of 2005, a rise of 12.2 percent from the year-earlier figure. Ceslovas Matulevicius, Stumbras CEO, attributed the rise in turnover to growing sales on domestic market and an increase in exports. The company's sales on domestic market soared by 32.7 percent, year-on-year, to LTL 17.986 million.
Lietuvos Zinios, Verslo Zinios

Tuesday, 5th of April

LAL privatization tender was launched
The State Property Fund (SPF) launched a public tender for the privatization of national air carrier Lietuvos Avialinijos (Lithuanian Airlines or LAL) on Monday. Public tender documents are available for purchase from the privatization agency from April 4 to May 2. Bids will be accepted on May 4 and 5. SPF expected to complete the privatization in the summer. The government hopes to receive at least LTL 9.3 million for its 100 percent stake in the flagship air carrier. The privatization terms and conditions include an obligation for the buyer of LAL to invest at least LTL 10 million in its stock capital over 2 years and retain at least 80 percent of jobs for a year.
Kauno Diena, Verslo Zinios, Respublika, Lietuvos Rytas

Limarko shipping is looking for new ships
Lithuania's Limarko Shipping Company is eyeing a used refrigerator ship and is also considering ordering and buying new vessels from shipyards in the future. "We are interested in new ships. Possibly, we will make orders to shipyards to build ships for us in the future," Limarko Shipping CEO Vytautas Lygnugaris said.
The company intends to invest about LTL 30 million in upgrading its fleet this year. The company, which is based in the port of Klaipeda, posted net earnings of LTL 4.5 million in 2004, twice as much as projected. Its revenue rose by 2.4 percent to LTL 62.2 million. Limarko holds a 67.31 percent stake in the shipping company.
Verslo Zinios, Lietuvos Zinios

Sales of Vilniaus Vingis down
Vilniaus Vingis, a leading Lithuanian producer of electronics, reported a year-on-year slump in its first quarter sales by 28 percent to LTL 25.3 million. In March alone the sales of the manufacturer decreased 45.5 percent year-on-year to LTL 7.2 million.
Bad results in March owed to the stoppage of Samsung plants in Hungary and Germany, which are the largest customers of Vilniaus Vingis in other countries.
Vilniaus Vingis expects to earn pre-tax profits of LTL 3.5 million in 2005. The manufacturer also expects sales this year to amount to no less than LTL 127 million.
Lietuvos Zinios, Verslo Zinios

Monday, 4th of April

IMF proposes Lithuania to tighten fiscal policy
The International Monetary Fund (IMF) sees mainly positive changes in the development of the Lithuanian economy, but it recommends focusing on stricter fiscal discipline and the further implementation of structural reforms. According to the IMF, a stricter fiscal policy is important for Lithuania if the country intends to adopt the euro on January 1 2007. The Bank of Lithuania reported that the IMF suggested paying greater attention to the reduction of budget expenditures and the improvement of the tax administration system. The fund also proposed adopting a fiscal responsibility statement. The IMF suggested that the Lithuanian government, having decided to reduce the individual income tax, should provide for measures to compensate the loss of revenue. The international body also pointed out the high risk of the growth of inflation.
Respublika, Verslo Zinios

Target of companies - Poland
Danbalt International, a Lithuanian-Danish joint venture, has opened its first footwear store in Poland and has plans to establish six more this year. Danbalt's first Danija store has opened its doors in a Targowek shopping centre. The company intends to open at least six more outlets in Warsaw, Lodz and Katowice this year. The chain's further expansion in the neighbouring country will depend on whether its first investment projects are successful. Danbalt currently owns 28 stores in Lithuania and six in Latvia under the names of Danija, Zaza and Este.
Lietuvos Rytas

Exports of cattle increases
Lithuania has exported about 12,000 heads of cattle and calves to the member states of the EU in the first 2.5 months of this year, the Ministry of Agriculture has reported. Exports of beef from Lithuania amounted to only 4,500 tons in 2003 but rose to 10,000 tons in the following year. In the first 2.5 months of this year, beef exports stood at 1,300 tons. The increase in exports also lifted cattle prices in the country. Compared to March of 2004, the average purchase price for cattle this year was 1.5 times higher.
Currently, cattle herds are expanding much faster than the number of cattle slaughtered and exported.

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