Observer "Lietuva"

WEEK 23.2005

Saturday, 11th of June

Dainava will produce for Marks & Spencer
Marks & Spencer, a major UK retailer, has authorized Dainava, a Lithuanian garment producer, to manufacture products under the Marks & Spencer brand name after an audit of the plant in Alytus. According to Dainava's 2004 annual report, the auditors assessed its manufacturing base as complying with Marks & Spencer's standards. Utenos Trikotazas, Lithuania's largest knitwear manufacturer, is also interested in partnership with Marks & Spencer. Vilkma, a local producer of men's shirts, works with the British retail chain already. Dainava says that its customers include German, Swedish, Belgian and UK companies manufacturing products for such brands as K.Steilmann, Marks & Spencer, Mexx, Tara, Gianini, La Strada and Next, and for the Quelle and Neckerman catalogues.
Last year the garment producer sold 17.03 percent of its products in Lithuania, with the rest exported to other countries.
Lietuvos Rytas, Respublika

Rural tourism farmsteads received fewer tourists
Country houses offering rural tourism services in Lithuania attracted a total of 30,800 visitors in the first five months of 2005, down 4.3 percent from the same period a year ago. In May the total number of guests reached 8,700, almost unchanged from May 2004, the Lithuanian Rural Tourism Association reported. According to data from the Statistics Department, rural tourist numbers grew by 19.8 percent in 2004, compared with 2003, and reached 196,600. The association currently has 978 members.
The Bank of Lithuania has published data showing that the country received LTL 2.273 billion in revenue from incoming tourism last year, 17 percent more than in 2003. The State Tourism Department predicts that revenue from incoming tourism will reach around LTL 2.5 billion this year.

Zemaitijos Pienas is to boost its authorized capital
The board of Zemaitijos Pienas, Lithuania's third-largest dairy producer by sales, is set to propose to the company's shareholders to back the raising of authorized capital by LTL 11.375 million, to LTL 48.375 million, from LTL 37 million. Zemaitijos Pienas posted LTL 11.19 million in net earnings for full 2004, a surge of 57.8 percent from the year-earlier figure. The company paid out LTL 740,000 in dividends and LTL 260,000 in bonuses for board members.

Friday, 10th of June

Businesspeople discovered Russia
Lithuanian exports grew by 24.7 percent to LTL 9.334 billion in the first four months of 2005 from a year earlier, while imports rose by 16.5 percent to LTL 12.347 billion. Exports increased by 31.8 percent and imports were 21.8 percent higher in April from the same period a year ago. In April versus March, exports rose by 4.3 percent and imports went up by 30.8 percent. The country's biggest export partner was Russia with 10 percent of total exports, followed closely by Germany with 9.9 percent, Latvia with 8.8 percent, France with 8.1 percent and Estonia with 5.9 percent. Russia also topped the import rankings, accounting for 30.5 percent of total imports. Also on the list of major import partners was Germany with 14.2 percent, Poland with 7.4 percent, the Netherlands with 4 percent and Latvia with 3.5 percent.
Lietuvos Rytas, Respublika, Lietuvos Zinios

TV producers got stuck
Lithuania's TV set producer Siauliu Tauro Televizoriai (STT) posted sales of LTL 134.168 million for the first five months of 2005, a decline of 4.7 percent versus the year-earlier figure. The company, suffering from the downturn on electronics market, produced 478,500 TV sets, some 4.4 percent less compared with the January-to-May period of 2004, Laimute Zimkiene, STT spokeswoman, said. The results came worse than expected amid stagnation on the market, she noted.
The TV set manufacturer posted a pre-tax profit of LTL 3.102 million in 2004, a rise of 1.3 percent from 2003. Its turnover rose by 55.5 percent to LTL 335.458 million, as sales surged by 83.9 percent to 1.256 million sets. This year the company aims to achieve a turnover of LTL 500 million and manufacture at least 1.5 million TV sets. Lietuvos Zinios

Most of EU assistance will be channelled to Lithuanian power plant
The European Commission states that in the future the largest sum of money from the EU for the Lithuanian power sector will be allocated to the modernization of a power plant in Elektrenai. To compensate for the loss of electricity production after the closure of the Ignalina Nuclear Power Plant, the international decommissioning fund for the plant has allocated EUR 139 million. The implementation of the first modernization projects financed from EU funds should begin soon at the Elektrenai Power Plant. The Polish company Rafako is going to carry out a LTL 34.5-million reconstruction project of the heating system, and the US company Emerson will reconstruct the control system of the power plant, a project that will cost over LTL 51.8 million.

Thursday, 9th of June

GDP increased by 5.6 percent over the first quarter
According to adjusted data, in the first three months of 2005, the Lithuanian economy grew 5.6 percent to LTL 14.735 billion at current prices. In January-March, GDP per capita stood at LTL 4,300, an increase of LTL 458 compared to the first quarter of 2004. According to previous reports, the first quarter growth of the GDP in Lithuania was 5.5 percent. The fastest development pace in the first three months of the year, 8 percent, was registered in the service sector. Analysts explain this decline as the beginning of an economic slowdown, yet they acknowledge that the results of one quarter are not a gauge for the whole year.
Respublika, Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios, Kauno Diena

Ferry from Klaipeda
Lisco Baltic Service, the Lithuanian subsidiary of the Danish shipping group DFDS, is opening on Saturday a new ferry line to the port of Baltiysk, in the Kaliningrad region, linking the Russian exclave to Lithuania and Sweden. Lisco, which is Lithuania's only ferry operator, said that the Lisco Patria, one of its best ferries, would operate on the new route. The ship has a capacity of 250 passengers and 95 heavy trucks.
"I hope that this line will not only help to strengthen economic and trade links between Russia, Lithuania and Sweden, but will also contribute to the development of tourism between the countries," Lisco CEO Arturas Gedgaudas said.
The Lisco Patria will initially sail on the Baltiysk-Klaipeda-Karlshamn route once a week.
Lietuvos Zinios, Lietuvos Rytas

Green light to water amusement park
On Wednesday, the Ministry of the Economy, the Lithuanian Business Support Agency, and the municipality of Druskininkai signed an agreement about the allocation of LTL 28.773 million from EU structural funds available to Lithuania. The EU financial assistance earmarked for Druskininkai must be used only to build the infrastructure of the future water park. A competition will be held to select a private operator, which will be in charge of running the site. The project, when completed, will help to attract over LTL 150 million of direct and indirect private investments and create 70 new work places.
Verslo Zinios

Wednesday, 8th of June

Freight traffic increased by 4 percent
Freight traffic on Lithuanian railroads increased by 4.3 percent year-on-year to around 19.2 million tons in the first five months of this year, according to preliminary data.
Lietuvos Gelezinkeliai (Lithuanian Railways), the national railway company, reported that international freight volumes fell by 2 percent to 13.8 million tons, while domestic traffic rose by 23 percent to 5.4 million tons. The state railway operator handled 45.5 million tons of freight in 2004, a rise of 5 percent from 2003. Passenger numbers remained unchanged at 7 million.
Verslo Zinios

Snoras posts two times bigger profits
Snoras, Lithuania's fourth-biggest commercial bank by assets, said its net profit doubled to LTL 17.168 million in the first five months of 2005, from LTL 8.6 million a year earlier. Managers of Snoras, which is controlled by Russia's Konversbank, said that the bank's net profit for May surged to LTL 3.9 million, from LTL 1.4 million in the same period a year ago. Snoras' assets reached LTL 2.258 billion as of June 1, rising by 16.8 percent since the start of the year.

Strategic changes in VP Market
VP Market, the Baltic's leading retail operator, has a new board of directors and a new member. Gintaras Marcinkevicius, who led the company's development in Bulgaria, came back to take the position in the board of VP Market. He is to replace Zilvinas Marcinkevicius, who worked in the said position since April 12.
In the words of Ignas Staskevicius, chairman of the board of directors of VP Market, the company has a new strategic goal - to become an open joint stock company, the shares of which would be quoted on the stock exchange.
The January-March sales of VP Market amounted to 330.8 million euros, 21 percent higher than sales in the corresponding period of 2004.
Lietuvos Zinios, Respublika

Tuesday, 7th of June

Beer market grew by 5.6 percent
Six major Lithuanian breweries recorded a 5.6 percent year-on-year increase in domestic beer sales to 91.94 million litres in the first five months of 2005. In May alone, their combined beer sales rose by 18.5 percent year-on-year to 24.55 million litres.
Svyturys-Utenos Alus sold 44.13 million litres of beer during the five months, a rise of 3.5 percent from the same period a year ago. Kalnapilio-Tauro Grupe was second with beer sales of 21.40 million litres, up 4.3 percent year-on-year. Ragutis raised beer sales by 7.4 percent to 10.22 million litres, while Gubernija posted a 5 percent rise in sales to 9.55 million litres. Rinkuskiai boosted its beer sales for the five months by 28.8 percent year-on-year to 4.16 million litres, while Kauno Alus achieved a 22.2 percent increase in sales to 2.48 million litres.
Svyturys-Utenos Alus held a 48 percent share of the domestic beer market in the five months, followed by Kalnapilio-Tauro Grupe with 23.3 percent, Ragutis with 11.1 percent, Gubernija with 10.4 percent, and Rinkuskiai with 4.5 percent.
Lithuanian beer producers recorded a 5.4 percent growth in aggregate domestic beer sales last year, to 254.62 million litres.
Respublika, Lietuvos Rytas

PST will construct a plant in Kaliningrad
Panevezio Statybos Trestas (PST), the leading Lithuania's construction company, will build a LTL 100 million soya oil plant in Russia's exclave of Kaliningrad, which will evolve into the largest soya-processing complex in Russia. The Panevezys-based company has already concluded a contract agreement on the construction of soya oil complex in the Kaliningrad region with Russia's company Sodruzhestvo Soya. The construction works will be launched in June 2005 and should be completed by late 2006. The value of new project far exceeds the previous largest project implemented by PST in the region of Kaliningrad, i.e., the building of some LTL 6.5 million fish processing plant for Lithuania's Viciunai group.
PST has been named the general contractor for the building of plant with processing capacities of 1,900 tons of soya beans per day, an elevator and storage facilities with a combined storage capacity of 18,000 tons.
Lietuvos Zinios, Lietuvos Rytas

Alnos Biuro Sistema was renamed into Daily Service
Alnos Biuro Sistema, a Lithuanian distributor of the stationery equipment has changed its name to Daily Service. On Tuesday, the company's branch in Latvia will start operating under the changed name too, whereas the Estonian branch will do it only in September. Valentinas Milaknis, the board chairman of the Daily Service, said the name change was one step when preparing for the further expansion. Besides, the new name is expected to facilitate the communication with customers and suppliers and increases the sales.
Verslo Zinios

Monday, 6th of June

LTL 11 million EU assistance for Klaipeda’s industry
The Lithuanian seaport of Klaipeda is the first city in the country to receive assistance from EU structural funds for industrial development. The Free Economic Zone (FEZ) of Klaipeda will receive LTL 10.8 million. The EU money will cover the preparation of ten to fifteen new sites for investors, over 400,000 square metres of the Klaipeda FEZ.
There are now four companies working on the territory of the Klaipeda FEZ - Yazaki, a Japanese producer of wiring; A. Espersen, a Danish owned fish processing company; Klaipedos Verslo Parkas, another Danish enterprise; and Nemuno Banga, a leading producer of PET packaging in Lithuania.
Verslo Zinios

Interested in Mazeikiu Nafta
Austria's company Baltic Holding, which is associated with Russia's gas giant Gazprom, is considering possible investments into Mazeikiu Nafta, the sole Baltic oil refining and transportation complex controlled by embattled Russia's Yukos concern, and Lithuania's petrochemical industry. Moreover, the Austrian company sounds ready to supply crude to Lithuania, Robert Nowikivski, Baltic Holding chairman, has told Lithuania's Economy Minister Viktor Uspaskich at Friday's meeting in Vilnius.
Baltic Holding, which has an authorized capital of LTL 34.5 million, has been established by Gazprom-owned Gazprombank, one of top five Russia's banks, which controls 55 percent of Austrian company. Austrian companies Petrochemical Holding and Jurimex Commerz Transit control 35 percent and 10 percent of Baltic Holding, respectively.
Verslo Zinios, Respublika

PM does not lose hope
Prime Minister Algirdas Brazauskas has hope that an agreement on the European Union financial package for 2007-2013 will be reached on time. He said this after a meeting Thursday with Jean-Claude Juncker, the prime minister of Luxemburg presiding over the bloc at the present time.
"The negotiations on the financial outlook are not going well, but we still have hope that an agreement will finally be reached at the EU summit in mid June," the governmental press service quoted Brazauskas as saying.
Lithuania is giving a large amount of attention to the financial agreement, since the terms for EU structural support to Lithuania will depend on it.
Verslo Zinios

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