Observer "Lietuva"

WEEK 30.2005

Saturday, 30th of July

VST profit came in at LTL 14.9 million
VST, the operator of the western part of the Lithuanian national power grid, posted a net profit of LTL 14.9 million for the first half of this year on revenues of LTL 417.5 million. VST reported, under business accounting standards, a net profit of LTL 3.797 million for the first half of 2004 with revenues at LTL 350 million. However, this year's results are not comparable with those from last year due the application of different accounting standards.
Antanas Poska, the financial director of VST, admitted that the six-month profits make up less than half of the annual estimate but the company hopes to stand by the estimate by using internal resources. According to a forecast, the yearly profits should reach LTL 35 million in 2005.
Respublika, Lietuvos Rytas

Construction prices go up
Construction prices in Lithuania rose by 1.4 percent in June versus May and surged by 7.1 percent from June 2004. The rise in construction prices resulted on the increase in wages and overheads, as well as higher prices of construction materials and products. Year-on-year, residential construction costs rose by 7.7 percent, while the costs of non-residential and engineering construction increased by 7.4 percent and 6.4 percent, respectively. In month-on-month terms, residential construction costs climbed by 1.6 percent, while non-residential and engineering construction costs increased by 1.5 percent and 1.1 percent, respectively. The rise in residential construction costs resulted on a 3.5 percent increase in wages and overheads. The prices of construction materials and products edged up by 0.1 percent, while the per-hour cost of construction equipment operation climbed 0.2 percent over June.
Lietuvos Zinios

The gas market grew over 6 months
The Lithuanian market of natural gas this year grew by 4.2 percent to 1.6 billion m3, according to report of Lietuvos Dujos, the major domestic importer of natural gas. More than 99.4 percent of all gas deliveries in the country are handled through the system of Lietuvos Dujos. This company said that its six-month deliveries to customers were 79 percent larger than they were in first half of 2004 - 751.1 million m3.
The major Lithuanian gas importer earlier was Dujotekana, whose customers are companies that use above 15 million m3 of gas a year. In January-June 2005, this utility imported 273 million m3 of natural gas, 2.9 times less versus the same period of the preceding year.
The only supplier of natural gas to Lithuania is the Russian gas giant Gazprom. It sells directly gas to Achema, a fertiliser producer of Achemos Grupe. Kauno Termofikacine Elektrine, a thermal-heat plant, also buys gas from Gazprom without mediators.
In accordance with a deal with the Russian company, which owns a third of Lietuvos Dujos, this Lithuanian gas utility must control at least 70 percent of the domestic gas import market.

Friday, 29th of July

Colgate-Palmolive products are back on the shelves of VP Market
The products of Colgate-Palmolive, the leading global healthcare products and household chemicals producer, are coming back to the shelves of the top Lithuania's retail chain operated by VP Market. The delivery of Colgate-Palmolive products to the stores of VP Market was halted in early July amid talks over the conclusion of new bilateral agreement between the companies. Colgate-Palmolive markets a wide range of well-known brands, including Colgate, Palmolive, Ajax, Lady Speed Stick, Soupline and Mennen Speed Stick.
In August 2002, the products of Colgate Palmolive disappeared from the stocks available at VP Market stores for several months. However, later the two parties agreed the terms of cooperation.
Respublika, Lietuvos Rytas

Sales of STT plunge
Lithuania's TV set producer Siauliu Tauro Televizoriai (STT) said its first-half revenues fell by 9.7 percent year-on-year to LTL 147.571 million due to the sluggish electronics market. STT spokeswoman Laimute Zimkiene said that sales for the first half dropped by 10.5 percent year-on-year to 420,500 TV sets.
"The decline in sales was caused by the cyclical nature of TV set sales, which is particularly strong in Europe. Growth-driving factors prevailed last year, but this year the market stagnates," she said.
Lietuvos Zinios

GDP increased by 8.2 percent in the second quarter
Lithuania's GDP growth unexpectedly accelerated in the second quarter of this year, but analysts are cautious about whether the economy will continue to grow at this rate in the second half. The Statistics Department announced on Thursday that GDP grew by 8.2 percent year-on-year in the second quarter to reach LTL 17.129 billion. In the first half, the economy expanded by 7 percent year-on-year to LTL 31.817 billion.
Gitanas Nauseda, advisor to the president of SEB Vilniaus Bankas, said, however, that economic growth is unlikely to be very strong in the second half of this year, noting, among other things, that the data will be compared with the rather strong growth figures in the same period last year. SEB Vilniaus Bankas forecasts that the country's GDP will grow by 6.8 percent this year, a rate similar to that of last year, which would be a great achievement.
GDP per capita in the second quarter of this year was LTL 5,001, up 8.6 percent compared with the same period in 2004. The strongest growth was recorded in production and production related services. Growth rates in the agricultural, manufacturing, construction, hotel and restaurant, transportation, warehousing and communications sectors were higher than that of the whole economy.
Respublika, Lietuvos Rytas, Lietuvos Zinios, Verslo Zinios

Thursday, 28th of July

Lietuvos Energija profit shrank
Lietuvos Energija, the state-run power transmission grid operator, reported a pretax profit of LTL 14.5 million for the first half of 2005, a plunge of 4.3 times from the year-earlier figure of LTL 63 million. The profit figure, although much lower than last year, far exceeded the forecasts as the company projected that it would post losses on the back of decline in exports of electricity and the rise in deterioration costs. The increase in assets' value raised the deterioration costs by almost LTL 44 million in year-on-year terms, although it did not affect the cash flows or EBITDA, which declined by 5.5 percent in the reporting period, to reach LTL 93.2 million.
Exports of electricity made up 2.4 billion kWh in the six-month period, a plunge of 1.8 billion kWh from the year-earlier figure.
Revenues declined by 10.7 percent, year-on-year, to reach LTL 425 million in the January-to-June period.
Respublika, Verslo Zinios, Lietuvos Zinios, Kauno Diena

Sanitas acquired company bigger than itself
Sanitas, Lithuania's biggest pharmaceutical producer, closed on Wednesday the acquisition of a 100 percent interest in Hoechst-Biotika, a Slovak pharmaceutical company. "We do not plan any changes in the company and its management," said Sanitas CEO Saulius Jurgelenas.
The generic drug manufacturer, which is based in the second-biggest city of Kaunas, bought the Slovak plant from Sanofi-Aventis, a global pharmaceutical company, for about EUR 12.7 million. Sanitas intends to transfer a part of orders to the Slovak producer until it completes the construction of its new plant in Kaunas.
Together with Hoechst-Biotika and Altisana, a subsidiary, the company is projecting consolidated net earnings of LTL 7.2 million and sales of over LTL 49 million this year.
Lietuvos Rytas, Lietuvos Zinios, Verslo Zinios

LAL plane tickets will become more expensive
Lithuanian Airlines (LAL), the national air company under privatisation, has announced that it is lifting the fuel charge by 36.8 percent to LTL 52 a fare. This charge is included in the amount of fare. In its rationale, the company cited soaring prices for aircraft fuel. LAL started to apply a fuel charge per passenger in June of 2004.
Giedrius Sniukas, the spokesman of the company, indicated that airlines are forced to increase fuel charges because of surging fuel prices in global markets. From the beginning of 2005, the prices for a tonne jumped 42 percent.
”Due to higher prices of aircraft fuel and an increased number of flights, the costs of Lithuanian Airlines last year went up 80 percent, or LTL 16 million, versus the year 2003,” Sniukas said.
During the first five months of this year, LAL carried 43.9 percent more passengers than it flied in the year ago - 186,620 passengers.
Respublika, Verslo Zinios

Wednesday, 27th of July

Lower profit of Snaige
Snaige, the only refrigerator manufacturer in the Baltics, reported a consolidated pretax profit of LTL 16.15 million for the first half of 2005, a drop of 2.7 percent from the same period a year ago. The group's first-half revenues rose by 20.3 percent year-on-year to LTL 164.79 million.
"Prices for raw materials rose faster than refrigerator prices. Other factors that had an impact on our results in the first half of this year were investments in sales and marketing activities in Russia, as well as an increase in import duties on refrigerators in Ukraine," Snaige CEO Mindaugas Sestokas said.
Snaige exports over 90 percent of its products to foreign markets. While the Ukraine is currently its main export market, the company sees good prospects for export growth in Russia as well.
Snaige expects to raise profits to LTL 26.4 million and increase revenues to LTL 441 million.
Lietuvos Zinios, Respublika, Verslo Zinios

Profit of RST shrank
Rytu Skirstomieji Tinklai (RST), the state-run power distribution company, posted a pretax profit of LTL 11.7 million in the first half of 2005, a decline of 9.3 percent from LTL 12.9 million in the same period a year ago.
The power distributor targets an 11percent growth in revenues to LTL 823.2 million this year, as electricity sales are expected to rise by 2.3 percent to 3.613 billion kilowatt-hours.
Lietuvos Zinios, Respublika

Karmelava may become national airport of the country
The officials of Vilnius and Kaunas have arrived at consensus to suggest that Kaunas be made the central hub for passenger and freight aircraft in the country. Meanwhile, Vilnius would continue to operate its international airport with specialisation as a city airport, says a report of both local administrations. Vilnius and Kaunas are working on a project of a dual city that would connect both cities.
On Tuesday, the planners of this project met in Kaunas. They said that the Kaunas Airport is highly important for the regional economic and tourist development of the dual city. The Transport Ministry is slow to bless these projects, though. Valdemaras Salauskas, secretary of the ministry, said that the decision for an airport with the national status would come no earlier than in a year or 1.5 years.
It is expected that operations in Kaunas Airport should swell with the advent of low-fare airlines. Ryanair, a low-fare Irish air company, is to launch flights from Kaunas to London at the end of September. Wizz Air, one more operator of cheap flights, will handle flights between this Lithuanian city and Warsaw from December 1.
Respublika, Kauno Diena, Lietuvos Rytas

Tuesday, 26th of July

Gubernija, a major Lithuanian beer producer, posted losses of LTL 1.483 million in the first half of 2005, up 87.2 percent from losses of LTL 792,200 in the same period last year. Gubernija said that revenues for the first half increased by 2 percent year-on-year to LTL 29.763 million.

Small insurers catch up with big ones
Lithuanian insurance companies raised almost LTL 540 million worth of insurance premiums during the first half of this year. The six-month premiums exceeded the year-ago results by 6.4 percent. Domestic insurance operators handled claims worth LTL 181 million, a growth of 21.7 percent from the first six months of 2004. The portfolio of non-life insurance premiums in the first quarter grew 3.7 percent to LTL 415 million. Claims paid in this sector grew almost 25 percent to LTL 166 million. The life insurance market advanced 16.6 percent to nearly LTL 125 million. Claims settled were 2.8 percent lower – LTL 15 million.
Lietuvos Draudimas widened its non-life insurance share of the market by 3 percentage points year-on-year. If Draudimas boosted its market share by 2.1 percent, while PZU Lietuva – by 0.9 percent.
Verslo Zinios, Lietuvos Zinios, Lietuvos Rytas

Tile maker skids
Dvarcioniu Keramika, the leading manufacturer of ceramic tiles in the Baltics, ended the first half of 2005 with a loss of LTL 2.094 million, compared with a profit of LTL 865,000 in the same period a year ago. The company, which is majority owned by Poland's ceramic tile producer Opoczno, attributed the first-half loss to falling sales and the sharp appreciation of the US dollar.
Sales for the first half dropped by 10.5 percent year-on-year to LTL 19.374 million. Lietuvos Zinios, Respublika

Monday, 25th of July

Stumbras halts production
Stumbras, the largest Lithuania's distillery controlled by private concern MG Baltic, aims to halt manufacturing for a fortnight's summer break from Monday, July 25.
"This is the usual practice for foreign companies, although Stumbras will apply it for the first time in its history. We intend to use the break for the examination of installations and some other tasks," Vaida Burviene, Stumbras' spokeswoman, said.
Stumbras employs 360 people; 230 of them will go on vacation.
Verslo Zinios

Ekranas works detrimentally
Ekranas, one of Europe's leading colour picture tube producers with a one-fourth market share, posted LTL 164.6 million in sales for the first half of 2005 and said that losses amounted to LTL 36 million and exceeded preliminary estimations by LTL 1 million. In June, the sales of Ekranas amounted to LTL 27.6 million, 23.3 percent lower than sales in June of the previous year.
“Results went down according to the plan, production and sales shrank,” Angelija Zokaitiene, representative of Ekranas, said.
Verslo Zinios

Audimas boosts exports
Half-year sales of Audimas, the Baltics largest producer of sportswear, this year advanced 22.8 percent to LTL 39.4 million.
”High results of this period were achieved on strong growth of exports and the Audimas-trademarked produce. Also, one of the principal factors that enhanced sales was a successful expansion of the retailing network. There were two new own-brand stores of Audimas opened in Lithuania during this half-year," Rimvydas Povilaitis, the chairman of the company, said.
In the first six months, the Kaunas-based Audimas raised overseas deliveries by 24.2 percent to LTL 30.31 million.
Verslo Zinios

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