Observer "Lietuva"

WEEK 3.2005

Saturday, 22nd of January

Sugar quota was exceeded
Three Lithuanian sugar refineries owned by Denmark's Danisco Sugar increased sugar production by 1.9 percent to 104,000 tons in 2004, exceeding their production quota by more than one-fourth. The three plants in Panevezys, Kedainiai and Kursenai had a combined production quota of 82,000 tons, out of Lithuania's total quota of 103,010 tons. Danisco Sugar Panevezys together with its Kursenai unit purchased 428,000 tons of sugar beets and produced 62,800 tons of sugar last year, of which 12,600 tons were above the quota. Danisco Sugar Kedainiai produced 41,300 tons of white sugar during the 2004 production season, exceeding its quota by almost 30 percent.
Danisco Sugar, the largest sugar producer in Northern Europe, has announced that the output of its sugar refineries in Denmark, Sweden, Finland, Germany and Lithuania totalled around 1.242 million tons of sugar last year. The output was 8.8 percent above Danisco's EU quota.
Lietuvos Zinios

Deep-sea port needs EU assistance
The city of Klaipeda expects to have a deep-sea port for servicing larger vessels by 2015. For this, an artificial island will be built not far from the coast. On Friday, the government's strategic planning committee, which is chaired by Prime Minister Algirdas Brazauskas, voted to approve the concept of the deep-sea port in Klaipeda, reported the governmental press service. At the present time, the depth of the channel in the port is 14.5 metres, making entry possible for vessels with a draught of 13.5 metres only. The port development strategy envisages the development of the northern part of the port for Baltmax type vessels with a draught of 15 metres by 2015. To transfer the project into reality, a 1.5 km long quay will have to be built as well as a 700-metre-wide artificial island about 350 metres out to sea. The first development phase is expected to end by 2015, and the second one will continue until 2025.
The government will only fund part of this project and therefore plans to search for financial investors. The whole project estimate may cost as much as LTL 1.5-LTL 2 billion.
Respublika, Lietuvos Zinios

Ryanair wants one million for a link
Apart low airport rates and other favourable conditions, Irish budget carrier Ryanair is eager to get up to LTL 1 million per year from Lithuania for flights to and from the country. The Irish company put forward a proposal to effectively subsidise its flights via huge payments for links to Lithuania on Ryanair's website. "I would say that it is pure subsidising, which is contrary to competition and distorts the market. This is not tolerated by the European Commission (EC), either,” Rima Jakyte, head of Information, Analysis and Control unit of Lithuania's State Tourism Department, said.
In mid-December Ryanair proposed to the State Tourism Department to pay EUR 200,000 per month for a link to the department on Ryanair's website. The department rejected the price, which equalled its annual budget.
Lithuania has so far failed to attract any low-fare carrier.
Lietuvos Zinios

Friday, 21st of January

Investments affect Achema’s profits
Lithuania's nitrogen fertilizer manufacturer Achema is launching a new three-year investment program worth over LTL 200 million this year after completing a previous three-year investment program. The Achema Group, which owns Achema, has said that the 2005-2007 investment program is aimed at increasing the plant's organic product, resin and electricity production capacities and implementing energy-saving measures. Achema started the last of four new nitric acid units on Thursday, doubling its annual nitric acid production capacity to more than a million tons.
"The expansion of the nitric acid production capacity under the 2003-2004 investment program was the largest investment, amounting to over LTL 100 million," Jonas Sirvydis, CEO of Achema, said.
Achema has invested more than LTL 200 million in new fertilizer products, modernization of production facilities and energy-saving and environmental projects over the past three years.
Lietuvos Zinios, Verlso Zinios

Ekranas forecasts losses
Ekranas, one of Europe's leading colour picture tube manufacturers with a one-fourth market share, is projecting losses of LTL 10 million in 2005 amid a continuing downturn in the global TV market. The company said on Thursday that the negative trends in the global market were likely to continue in the first half of 2005. It expects that a market recovery will get underway in the third and fourth quarters of 2005 and that new products and increased prices will help it achieve "a significant profit" in 2006.
It is planning to invest up to LTL 20 million in a new product, Slim Type CPT, this year with a view to starting mass production in 2006. It also intends to prepare a feasibility study within six months for assembling liquid crystal displays (LCD) at its production facilities in Panevezys.
Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios

Insurers approach to billion
Lithuania's insurance market grew by 12.4 percent in 2004, compared with 2003, with total direct premiums written reaching LTL 914.8 million, according to data released by the Insurance Supervisory Commission. Direct non-life premiums increased by 13.4 percent year-on-year to LTL 679.9 million, accounting for 76 percent of the overall premiums. Life insurance premiums rose by 9.6 percent to LTL 234.9 million.
Insurance payments totalled LTL 299.4 million last year, down by 6.4 percent from the previous year.
Verslo Zinios, Respublika

Thursday, 20th of January

USSR vodka and USSR beer
Lithuania's VP Market, the largest retail chain in the Baltics, has started selling USSR vodka in bottles decorated with Soviet symbols. Meanwhile Kaunas-based brewery Ragutis plans to start production of USSR beer. Bottles of the new vodka are decorated with the Soviet flag with hammer and sickle and pictures of workers, with labels reading CCCP vodka and USSR vodka. The vodka is produced by the Kaunas-based alcoholic beverage manufacturer Stumbras, which is controlled by Lithuania's multi-business group MG Baltic, to order of VP Market.
"I don't like such things. But this is not the first case; there are some 'Soviet sausages.' I think the producers are taking advantage of the fact that, according to surveys, nearly half of Lithuania's residents feel nostalgia for the Soviet era and are convinced that life was better at the time. These goods are produced for them," opposition Homeland Union (Conservatives) leader Andrius Kubilius said.
Businessman Viliumas Malinauskas, the founder of the Grutas Park of Soviet-era sculptures, spoke more reservedly about the use of Soviet symbols on vodka bottles.
Kauno Diena, Lietuvos Rytas

Boom of compulsory motor third-party liability insurance market
Lithuania's compulsory motor third-party liability insurance market expanded to LTL 240.337 million in 2004, a rise of 26.7 percent from the year-earlier figure of LTL 189.4 million, the country's Insurance Supervisory Commission said on Wednesday. According to preliminary estimations, eleven insurance companies that are providing compulsory motor coverage concluded 2.436 million contracts last year.
Lietuvos Draudimas, the country's biggest insurance company, held a 22.1 percent share of the compulsory motor insurance market with LTL 53.026 million in premiums written. Its market share shrank by 7.8 percentage points from 29.9 percent a year ago, as premiums written fell by 8.7 percent.
Baltikums Draudimas ranked the second with premiums written surging by 39.6 percent to LTL 39.626 million. The company boosted its market share to 16.5 percent, from 14.6 percent a year ago. PZU Lietuva, controlled by Polish insurance giant PZU, was the third.
Lietuvos Zinios, Respublika, Lietuvos Rytas

Lithuanian industry grew by 11.3 percent
Lithuania's industry grew by 11.3 percent in 2004 versus 2003, the country's Statistics Department reported on Wednesday. In December alone, the output by manufacturing, mining and quarrying sectors, as measured by sales, increased by 5.9 percent, month-on-month. The rise was 10.7 percent on a twelve-month basis. Excluding oil products, overall industrial sales for 2004 increased by 7.9 percent year-on-year. In December alone, sales were up by 11.4 percent, compared with December 2003.
Verslo Zinios

Wednesday, 19th of January

Banks posted record profits
Aggregate unaudited profits of commercial banks and branches of foreign banks operating in Lithuania totalled LTL 306.8 million in 2004, a surge of 31.3 percent from the year-earlier figure of LTL 233.657 million, the Bank of Lithuania has announced. Bottom-line earnings of nine Lithuania-registered commercial banks made up LTL 300.1 million, while branches of two foreign banks posted LTL 6.7 million in aggregate earnings. All banks active on Lithuania's market ended the year 2004 above the line for the first time ever in Lithuania's banking history.
Vilniaus Bankas reported the profit to LTL 128.9 million, down from LTL 132.3 million posted for full 2003. Meanwhile, Hansabankas boosted its net earnings by 82.6 percent, year-on-year, to LTL 111.2 million, from LTL 60.9 million a year earlier. Nord/LB Lietuva raised its annual earnings to LTL 19.482 million, from LTL 15.454 million a year before. Snoras' earnings surged to LTL 18 million, from LTL 7.245 million in 2003. While the earnings of Siauliu bank rose to LTL 6.51 million, from LTL 4.154 million in 2003. The earnings of Parex bank declined to LTL 5.852 million, from LTL 6.067 million, while Ukio Bankas reported the earnings of LTL 5.818 million, up from the profit of LTL 4.924 million in 2003. Medicinos Bankas raised its earnings to LTL 1.713 million, from LTL 1.4 million a year earlier.
Lietuvos Rytas, Lietuvos Zinios, Respublika, Verslo Zinios

Sales by Lithuania's Olifeja lottery grew by one-tenth in 2004
Olifeja, the leading Lithuania's lottery operator, reported a turnover of LTL 94.363 million for full 2004, a rise of 10.8 percent from the year-earlier figure of LTL 85.2 million. The company's pretax earnings, according to preliminary estimations, declined by 23.1 percent, year-on-year, to LTL 2 million, from LTL 2.6 million in 2003, Donatas Kazlauskas, Olifeja deputy CEO, said.
"For 2005 we are projecting the pretax earnings of some LTL 2 million on a turnover of LTL 96 million. However, the turnover figure might change on the back of various campaigns. The earnings figure cannot be more significant as it would be detrimental for our customers," Kazlauskas said.
Verslo Zinios

Lithuania has the most modern quarantine green house in Baltics
From now on, imported plants in Lithuania will be checked in a special newly constructed quarantine green house. The LTL 5.5 million worth project was financed by the state budget and the European Union's PHARE program. Dzukijos Statyba presented the most modern quarantine green house in the Baltic States, on Tuesday. The construction of it took a bit more than half a year. The green house will allow specialists to do mycological, bacteriological, virological, and haematological tests. According to a Twin Project of the international PHARE program, Lithuania will have to establish a special passport system for plants. It will allow more effective control of plant imports.
Lietuvos Rytas

Tuesday, 18th of January

Lithuania’s payment card market will surprise with technologies
Lithuania's payment card market grew by 17.3 percent during 2004, with the number of different cards issued by local banks reaching 2.707 million and their aggregate turnover coming to LTL 14.977 billion as of January 1, a rise of 32.6 percent from the year-earlier figure. Early in 2004, the aggregate number of different payment cards issued by domestic banks stood at 2.307 million. Bankers forecast a significant rise in demand for microchip cards in 2005 as the majority of banks have already confirmed their intentions to offer the latest technology cards on the market.
According to the latest data available, domestic banks installed 1,012 ATMs across Lithuania, a rise of 17 percent from the year-earlier figure, and approximately 15,120 payment terminals at trade and other outlets, 1,900 more than a year ago.
Bankers also predict a strong rise in demand for credit cards, which still account for an insignificant share on the market. According to the latest data from the Bank of Lithuania, the banks had issued 65,100 pure credit cards and 244,000 debit cards with a credit limit as of October 1, accounting for 2.6 percent and 9.7 percent of the total cards, respectively.
Lietuvos Zinios, Respublika, Verslo Zinios

EU subsidies strengthen Rokiskio Suris
Rokiskio Suris, Lithuania's largest dairy group, reported preliminary net earnings of LTL 28.092 million for full 2004, a surge of 88.5 percent from the year-earlier figure of LTL 14.906 million. Sales rose by 21.7 percent, to LTL 442.69 million, from LTL 363.843 million in 2003.
Dalius Trumpa, Rokiskio Suris production director, said that the company expected to get LTL 10.7 million in Brussels' subsidies for exports of 2004. "This amount was stated in the contracts concluded last year. We have already received some funds," he said.
The cheese output of the company totalled 20,100 tons in 2004, 6 percent more than it produced in 2003.
Lietuvos Zinios, Verslo Zinios

Sales of Venta soared in 2004
The sales of Venta, the leading producer of chairs and tables in Lithuania, reached LTL 69.15 million in 2004, 14.2 percent higher than sales in 2003 (LTL 60.6 million).
In 2004, the sales of the company were below the original estimate of LTL 72 million, because of a slowdown in sales in September, October, and December. Last year, Venta invested around LTL 5 million in the renovation of the factory and new equipment. In 2003, the company used about LTL 18 million for investments.
The Siauliai-based manufacturer exports almost 99 percent of its production, most of which goes to European countries. The Swedish concern Ikea is Venta's largest client.
Verslo Zinios

Monday, 17th of January

Reserve money increase
Lithuania's reserve money grew by LTL 273 million or 4.1 percent in December from November to reach LTL 7.001 billion, the central bank has announced. Currency in circulation rose by LTL 216.6 million, while balances on commercial banks' correspondent accounts increased by LTL 49.2 million, and mandatory foreign currency reserves of commercial banks firmed by LTL 3.7 million.
In 2004, reserve money increased by LTL 461.3 million. Currency in circulation and mandatory foreign currency reserves of commercials banks rose by LTL 457.4 million and LTL 106.4 million, respectively. Meanwhile, balances on commercial banks' correspondent accounts declined by LTL 106.3 million during the year.
Verslo Zinios

Less grain, poorer results of Klaipeda seaport
In the previous year, the Lithuanian seaport of Klaipeda handled 20.3 million tonnes of freight, a year-on-year decline of 4 percent. Oil stevedoring operations in the port narrowed by 3 percent to 6.43 million tonnes, while handling of other freight dipped by a similar 4 percent to 13.87 million tonnes. The port handled 47 percent more freight containers during the year. The amount of containers loaded added up to 174,000 units.
The authority said that last year the growth was predetermined by the freight of metals, ferroalloys, scrap metal and short-lived commodities. The development followed installation of veterinary checkpoints aligned to EU standards. Like in other ports on the eastern coast of the Baltic Sea, Klaipeda posted a 53-percent lower volume of grain cargo in 2004, as a result of poor crop harvest and an unfriendly railway tariff policy in Russia.
Verslo Zinios

Sales of local sugar drop by 38.9 percent in Lithuania
45,800 tons of Lithuanian sugar was sold in domestic market last year – 38.9 percent less as compared to 2003. 110,900 tons of sugar were exported to non European Union countries – 6.5 times more than in 2003.
"We wouldn’t make it without the sugar export. The present export compensations total in about EUR 420 per ton and depend on world sugar prices," Rimantas Stulgys, president of Cukrus association, said.
According to him, export allows the sugar factories to cover the production expenses.
According to Lithuanian information system of agriculture and foodstuff, 905,000 tons of sugar beets were purchased last year – 2.7 percent more than in 2003.

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