Observer "Lietuva"

WEEK 19.2005

Saturday, 14th of May

Lithuanians prefer cider
Lithuania's cider market soared to LTL 1.57 million litres in the first four months of this year, from 721,000 litres in the same period a year ago. "Cider is becoming a popular alternative to strong spirits at youth parties, and this trend is going to strengthen in the future," Svyturys-Utenos Alus marketing director Pranas Kuisys said.
Svyturys-Utenos Alus holds a 31.4 percent share of the cider market. Sales of its Kiss cider doubled in the four months, year-on-year, to reach 495,000 litres. Ragutis ranks second with a 15.5 percent market share. The company boosted sales of Fizz cider by 87 percent year-on-year to 243,000 litres in the four months. Cider in cans and PET containers account for 87 percent of the total cider sales. Lithuania's cider market grew by 81 percent to 4.9 million litres last year. Experts say that the market still has room for growth.
Lietuvos Rytas, Respublika

Ryanair is slow to make decision
Ryanair, the Irish budget airline, promised on Friday to give a final answer on whether it intends to start flights to Kaunas Airport in Lithuania within a month. If Ryanair's answer is positive, a service to Kaunas could be introduced in October.
"Ryanair promised to give us a definite answer as to whether they see possibilities for starting flights from Kaunas Airport in around a month's time, after the company's board has discussed this issue," Valdemaras Salauskas, the said
The official said Ryanair is satisfied with all the technical conditions at the airport. He added, however, that the problem of "marketing money" remains to be solved.
"Information that there is a service to Lithuania and booking information would be made available on Ryanair's website. The company sees it as a marketing tool and wants the country to cover these costs," Salauskas said.
Reportedly, last year Ryanair asked Lithuania to pay up to a million litas per year for Internet tourism advertising.
There are currently no low-fare airlines operating in the country.
Lietuvos Zinios, Kauno Diena, Respublika

Current account deficit
Lithuania's current account deficit declined by LTL 245.7 million to LTL 156.7 million in March from February amid a decline in foreign trade deficit, the Bank of Lithuania reported on Friday. Current account deficit plunged more than threefold versus March 2004. The deficit of the current account stood at almost LTL 656 million during the first quarter of 2005. The ratio of the deficit to the gross domestic product was 4.4 percent.

Friday, 13th of May

Lithuanian banks are ready for potential crises
Lithuanian banks are prepared to cope with the worst-case scenarios and are capable of dealing with potential financial crises and of maintaining a sufficient capital base, the central bank said. The Bank of Lithuania's Credit Institutions Supervisory Department made this conclusion as it presented the results of stress testing at commercial banks to the central bank's board on Thursday. Stress tests were undertaken by all commercial banks operating in the country, based on their 2004 annual financial statements. Having evaluated the results of stress tests, the banks mapped out actions to be taken to ensure continuity of operations under one or another scenario. Capital base consolidation remains the key risk reduction measure.
Lietuvos Zinios, Respublika, Lietuvos Rytas

Storm decreased profit of insurance company
Lietuvos Draudimas, the country's largest non-life insurance company, announced that, the written premiums amounted to LTL 53.7 million in the first three months of this year, 14.5 percent higher than this figure in the first quarter of 2004. The company said its financial result was affected by the severe storm that hit the country in early January and several large claims that led it to increase provisions for potential claims.
Darius Masionis, CEO of Lietuvos Draudimas, said that certain changes in securities accounting principles also had an impact on the first-quarter performance result. The company also pointed out that the majority of compulsory motor third-party liability policies are concluded in the second quarter this year, rather than in the first quarter as it had been before Lithuania became a EU member.
"Therefore, it is not correct to compare the results in the first quarter of this year with those in the first quarter of last year. A comparison between the first-half figures will be more accurate," Masionis said.
Verslo Zinios, Lietuvos Rytas

Ekranas drops according to the plan
Ekranas, one of Europe's leading colour picture tube producers with a one-fourth market share, reported LTL 108.4 million in sales for the first four months of 2005, a plunge of 42 percent from the year-earlier figure of LTL 186 million.
"The results are as scheduled late in 2004. Sales of electronics and household appliances decline throughout the world, and Ekranas could not avoid this trend," Angelija Zokaitiene, Ekranas' spokeswoman, said.
Exports destinations of the company had not undergone any significant changes this year, she said adding that sales on Lithuania's market comprised about one-tenth of total output.
Verslo Zinios, Lietuvos Zinios

Thursday, 12th of May

Ryanair to start flights in autumn
Lithuania intends to invite Ryanair to start low-cost flights in and out of Kaunas Airport this fall, the Transport Ministry said. A delegation from the Irish budget airline, headed by Benny Berger, director of the new flights development department, is to arrive in Lithuania on Friday. All institutions participating in the talks with Ryanair - Kaunas Airport, the municipalities of Vilnius and Kaunas, the Kaunas county administration and the State Tourism Department - agreed on a joint negotiating position on Wednesday. The Lithuanian side is waiting for concrete proposals as to the start of flights from Ryanair and expects that the airline will introduce at least one daily service by the end of this year.
Valdemaras Sulauskas, the Transport Ministry secretary, said that the municipalities of Vilnius and Kaunas intend to help attract the low-fare carrier to Lithuania by developing the necessary infrastructure and organizing regular public transport services to the airport, which is located in Karmelava, not far from Kaunas.
Lietuvos Rytas, Lietuvos Zinios, Respublika

Profitability of traders decreased
Aggregate pre-tax earnings of Lithuania's wholesale and retail traders surged by 29.8 percent, year-on-year, to LTL 1.772 billion last year, while net losses rose by 5.4 percent, to LTL 417.293 million, Lithuania's Government has said in its key economic sector review. Last year profit margin in the domestic trade sector stood at 3.3 percent and was the lowest as compared with other sectors. Profit margin in Lithuania's transport, storage and communications sector made up 3.9 percent last year. Aggregate pre-tax earnings of companies active in this sector declined by 3.3 percent, year-on-year, to LTL 630.89 million in the reporting period. Postal service and international communications companies showed the highest profit margin, at 13.3 percent last year, and reported LTL 364.675 million in pre-tax earnings and LTL 12.147 million in aggregate losses. Petroleum products and tobacco sector, which reported combined losses of LTL 338 million, posted LTL 879.654 million in pre-tax earnings and achieved the profit margin of 11.2 percent.
Verslo Zinios, Lietuvos Rytas

Turnover of Balosa grew 4 times
Balosa, a company in Lithuania engaged in the production of peat for fuel, reported on Tuesday that its first quarter sales increased more than four times to LTL 514,000. Balosa, which belongs to Rubicon Group, one of the largest industrial groups in Lithuania, earned pre-tax profits of LTL 53,000 in January-March 2005. In this period of the previous year, the company had losses of LTL 72,000. A planned increase in peat production this year is expected to cause sales to grow to LTL 3.7 million and generate earnings of LTL 0.5 million. Balosa exports peat to Spain, Germany, Poland, and Austria. It controls a 550-hectare peat bog yielding about 30 to 35 tons of peat a season.
Respublika, Lietuvos Rytas

Wednesday, 11th of May

Foreign trade deficit fell to LTL 1.5 billion
Lithuanian exports grew by 22.6 percent to LTL 6.769 billion in the first quarter of 2005 from the same period a year ago, while imports rose by 13.7 percent to LTL 8.291 billion. The foreign trade deficit narrowed by 14.1 percent year-on-year to LTL 1.523 billion, according to non-final data based on customs declarations. Intermediate goods exports soared by 31.4 percent year-on-year to LTL 3.81 billion in the first quarter, while imports were up 21.5 percent to LTL 5.12 billion. Consumer goods exports rose by 19.8 percent to LTL 1.786 billion, while imports increased by 14.9 percent to LTL 1.49 billion. Machine and equipment exports fell by 3.6 percent to LTL 477.9 million, while imports dropped by 8.6 percent to LTL 1.22 billion. EU accounted for 70.9 percent of Lithuania's total exports and 58.9 percent of total imports. The CIS accounted for 15.4 percent of exports and 29.8 percent of imports. Respublika, Lietuvos Rytas, Verslo Zinios

Turnover of Lifosa
Lifosa, the Lithuanian phosphate fertilizer manufacturer controlled by Russia's Eurochem, posted sales of LTL 197.518 million for the first four months of 2005, a surge of 27.3 percent versus the year-earlier figure of LTL 155.118 million. In April, however, the company's sales declined by 9.8 percent, to LTL 38.467 million. Regvita Ivanoviene, Lifosa's director of commerce, attributed April decline in sales to shrinking sales of diammonium phosphate fertilizers, the key product of the company. "Our output did not decline in April as we stocked a larger batch of products, which will be marketed in Asia in May," Ivanoviene said. For 2004 Lifosa posted LTL 50.308 million in net earnings, a rise of 6.4 times versus the 2003 figure.
Lietuvos Zinios, Verslo Zinios

New head of association
Valdas Tekorius, the chief executive of the brewery Kalnapilio-Tauro Grupe, took over as the new chairman of the council of the Lithuanian Association of Brewers (LAB). Tekorius took the place of Sigitas Kalkys, an owner of the brewery Rinkuskiai, which is located in Birzai. The breweries making up the LAB include Svyturys-Utenos Alus, Kalnapilio-Tauro Grupe, Ragutis, Gubernija, Rinkuskiai, Kauno Alus, and Mazeikiu Lokys.
Lietuvos Rytas, Respublika

Tuesday, 10th of May

Sanctions on insurance company
The Lithuanian Insurance Supervisory Commission (ISC) has seized the assets of INGO Baltic, a Russian-owned local non-life insurance company, that cover the insurer's technical provisions. The supervisory authority said it imposed this sanction because INGO Baltic failed to comply with the solvency margin requirements. The commission had imposed the freeze on around LTL 10.5 million worth of INGO Baltic's assets. Its total assets amounted to LTL 24.57 million at the end of last year. The commission said that INGO Baltic's financial situation had deteriorated due heavy expenses and a loss of revenue associated with its rapid expansion in the last quarter of 2004 and the first quarter of 2005. The company suffered a loss of LTL 4.68 million in 2004, versus a net profit of LTL 215,000 in 2003.
Lietuvos Rytas, Lietuvos Zinios

One-third of Lithuanians want euro
Public support for joining the euro has strengthened in Lithuania during its first year in the EU, an opinion poll of RAIT has shown. Some 30.4 percent of the public favour replacing the national currency, the litas, with the single European currency as soon as possible. Almost a year ago, in mid-June 2004, the percentage of respondents who said they wanted to have euros in their wallets as soon as possible was 25.6 percent. Opposition to entry has slightly declined in the past ten months, to 26.4 percent from 27 percent The percentage of respondents who said that the country should not join the euro for at least 5 years has increased to 33.3 percent from 32.5 percent, but the percentage of those who believe that it should wait for at least 10 years has decreased to 9.5 percent from 11.5 percent.
Respublika, Lietuvos Rytas

Sales of Sanitas plunge
Sanitas, Lithuania's biggest pharmaceutical producer, reported sales revenues of LTL 9.4 million for the first four months of 2005, a drop of 28 percent from the same period a year ago. Sales for April fell by 22 percent year-on-year to LTL 2.667 million. Sanitas said the decline was primarily due to falling export revenues as a result of changes in prices for raw materials. Sanitas reported a net profit of LTL 4.65 million for the full year 2004.
Lietuvos Zinios, Verslo Zinios

Monday, 9th of May

Beer exports increased by one-third this year
Lithuanian beer exports totalled 2.69 million litres in the first four months of 2005, a surge of 33.8 percent from the year-earlier figure. Exports by Svyturys-Utenos Alus declined by 3.8 percent, year-on-year, to 1.54 million litres in the January-to-April period. Meanwhile, exports by Kalnapilis-Tauras Group soared 4.3 times, to 560,000 litres. Siauliai-based Gubernija brewer sold 570,000 litres of beer on foreign markets, a surge of 2.2 times from the year-earlier figure. Exports by Ragutis brewer, a new player on foreign markets, made up 20,000 litres in the first four months of 2005.

Banks introduce chip cards
Nord/LB Lietuva, the third by assets Lithuania's commercial bank controlled by Germany's Nord/LB, will shortly start offering international microchip Visa payment cards. "New technologies will ensure greater safety of microchip cards. Meanwhile, their service costs will remain unchanged, as compared with magnetic payment cards currently issued by the bank", said Elvina Nagelyte, head of sales channels division of Nord/LB Lietuva.
By early May, Nord/LB Lietuva issued over 316,000 payment cards, a rise of 22 percent from the year-earlier figure. Total turnover on cards issued by the bank exceeded LTL 331 million in the first three months of 2005. Hansabankas and Vilniaus Bankas are offering microchip cards as well.
Lietuvos Rytas

Jures Medis projects LTL 26.5 million turnover
Jures Medis, a Lithuanian manufacturer of glue laminated timber structures, has forecast that its turnover will reach LTL 26.5 million in 2005 and increase to LTL 60 million in the next five years. The company, which in the previous year sold 63.4 percent of its production in the German market, hopes to reduce its export to this country to 50 percent in the next three years. Jures Medis plans to enter new markets -Ireland and Italy - in 2005. In the previous year, the turnover of the company advanced 1.7 percent to LTL 21.7 million. The manufacturer earned net profits of LTL 76,130.
Verslo Zinios

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