Observer "Lietuva"

WEEK 37.2005

Saturday, 17th of September

Seimas prepares privatisation of Giraite armament plant
Lithuania's parliament is preparing to reorganize the state-owned Giraite armaments factory near Kaunas into a public company. Following the motion on Thursday, members of parliament approved the draft law prepared by the Defence Ministry that provides for the reorganization of State Enterprise Giraites Ginkluotes Gamykla (Giraite Armament Factory) into a public company. After the company has been reorganized, it will be placed for privatization. The armament factory was established to provide the national defence and the interior systems with ammo that would be manufactured there, however from the very start of its operations, the factory has sold much less ammo than it is capable to manufacture. The state has admitted it is unable to upkeep the enterprise by buying out its annual production output. Besides, the military and the police are buying their ammo abroad, where it is cheaper than that produced at the Giraite factory.
For the Giraite armament factory to generate profits it has to sell at least 20 million rounds of ammunition year-on-year; however, the exact quantity of ammo the factory produces has not been disclosed. The factory has been included into the list of companies entitled to participate in NATO's tenders.
Kauno Diena

Klaipeda seaport
In January-August 2005, Klaipeda seaport stevedored 140,600 containers (TEU), a year-on-year rise of 32 percent. These results put Klaipeda in the lead of the ports of three Baltic States. Shipping of TEU in Riga this year advanced 0.5 percent to 106,764 containers. In the period concerned, Tallinn stevedored 9.5 percent more containers year-on-year, or 81,187 TEU.
Lietuvos Zinios

Privatisation of power plant was postponed
The national Privatisation Commission on Friday foiled one more try to endorse the sale of Mazeikiu Elektrine, a local power plant. "They asked for more information, so the decision was postponed until next meeting,” Jolita Butkiene, the acting director of the marketing department at the State Property Fund, said.
The government is selling a stock portfolio of 85.7 percent of the power plant to Mazeikiu Nafta, a local oil refinery. The buyer offered LTL 17.8 million for the plant. In the middle of July, the Privatisation Commission also adjourned the deal regarding the company put up for sale. The press reports that assets of Mazeikiu Elektrine had not been evaluated before the tender attracted the eye of top state officials.
Falkon Capital, a Czech company, was equally bidding in this tender but was excluded from the deal as it allegedly posed hazard to national security.

Friday, 16th of September

LAL will become Fly LAL
Lietuvos Avialinijos (Lithuanian Airlines or LAL), the recently privatized Lithuania's flagship carrier, is to be renamed Fly LAL.
"We want the company name to sound the same in Lithuania and other countries and a foreign traveller to not wonder whether Lietuvos Avialinijos and Lithuanian Airlines is the same company or not," Vaidas Barakauskas, a member of the Board of Directors of LAL said.
LAL Investiciju Valdymas a subsidiary of Fima, a domestic provider of telecommunications and security services bought 100 percent of LAL for LTL 25.6 million. The controlling interest - 67 percent - of LAL Investiciju Valdymas belongs to Fima. ZIA Valda and Garantas each have stakes of 16.5 percent in this firm. Respublika, Lietuvos Rytas

Achema’s 6-month profit increased 4 times
Achema, a producer of fertilisers and chemical products based in Jonava, earned LTL 23 million worth of pre-tax profits during the first half of 2005. This figure indicates a surge of four times from the year-ago. Six-month income of the company edged up 52.8 percent to LTL 451 million. The chief executive of the company, Jonas Sirvydis, said that higher income resulted from auspicious global markets in terms of product prices and larger exports of fertilisers.
Achema, which is part of the domestic concern Achemos Grupe, handled overseas deliveries worth LTL 371 million in the first half of 2005. That was 51.1 percent more than it exported in the first half of the preceding year.
Respublika, Lietuvos Zinios

Mall Mandarinas was oepned
One more Rimi Hypermarket opened on Thursday at a newly constructed Mandarinas trade centre in capital Vilnius. The trade centre consumed about LTL 20 million of investments. Mandarinas will have another 45 goods and services selling outlets. Rimi Hypermarket, however, is to occupy about 4,500 m2 out of 9,000 m2 large building. The project has been developed by Estonian Merko group-owned E.L.L. Nekilnojamas Turtas. Rimi Hypermarket, belongs to Rimi, a Lithuanian retail operator, which intends to open three more such supermarkets in Lithuania by the end of 2005.

Thursday, 15th of September

Double-deck trains for LG
Lietuvos Gelezinkeliai (LG), the state railway company, plans to buy its first two double-deck electric trains, each costing about EUR 6 million. LG announced a tender to purchase two three-carriage electric trains on Wednesday. Offers will be accepted until November 8. It is planned that the new double-deck trains will run between Vilnius and Kaunas. LG now operates single-deck electric passenger trains on two lines, Vilnius-Kaunas and Vilnius-Trakai, but the double-deckers will not run on the latter route. LG will receive its first double-decker in late 2006, at the earliest, because it may take 15 to 20 months to manufacture such a train. The rail operator reported a net profit of LTL 72 million last year. Investments in the company reached LTL 353 million.
Lietuvos Rytas, Respublika

Snoras doubles its profit
Snoras, the fourth by assets Lithuania's commercial bank controlled by Russia's Konversbank, reported LTL 27.208 million in unaudited net earnings for the first eight months of 2005. In August the bank updated its performance figures forecasts for 2005 and raised the net profit projection by 1.7 times, to LTL 40 million, from earlier forecast of LTL 24 million. If the bank's forecasts are met, the net profit of 2005 will exceed respective last year figure by 1.9 times. The bank posted LTL 20.995 million in profit for the first half of 2005, a surge of 74.4 percent from the year-earlier figure.
Lietuvos Zinios, Verslo Zinios, Respublika

Profit of shipyard
Baltijos Laivu Statyba, a domestic shipyard controlled by the Danish Odense Staalskisvaerft, earned LTL 3.957 million in net profits in January-June 2005, 2.1 times more than it earned in the same period in 2004 (LTL 1.864 million).

Wednesday, 14th of September

Rokiskio Suris boosts its market share
Rokiskio Suris, the number one dairy of Lithuania, along with related entities have applied to the national competition authority for clearance to buy Europienas, a milk purchase cooperative, in an attempt to increase its presence in the milk purchase market. In other application, the dairy asked for permission to buy 50 percent of the stock of Pieno Upes, a company also dealing with purchase of milk.

Sales of Lifosa went up
Lifosa, the largest phosphate fertilizer manufacturer in the Baltics controlled by Russia's Eurochem, reported LTL 391.085 million in sales for the first eight months of 2005, a rise of 18.1 percent from the year-earlier figure of LTL 331.226 million.
In August alone, the company's sales rose by 32.4 percent, year-on-year, to LTL 49.455 million. The company posted a net profit of LTL 38.36 million for the first half of this year, more than a 12-fold increase from a year earlier, as the company pulled out of cooperation with distribution mediators.
Lietuvos Zinios

World bank praises Lithuania
Business conditions in Lithuania are the best among all EU newcomers as the country ranks 15th in the World Bank's list of top 30 economies on the ease of doing business, which shows New Zealand, Singapore and the US in the top three. Lithuania's ranking is the highest among all EU newcomers. The Baltic neighbours of Estonia and Latvia, at 16th and 26th positions, respectively, have also been included in the top 30.
Respublika, Lietuvos Zinios

Tuesday, 13th of September

Changes in tour operators’ business
Omnituras, one of the largest Lithuanian travel agencies, has temporarily withdrawn from the business of tourism as organiser. The company however says that it is going to make more investments in its current capital. From September 1, the agency has lost a license certifying that it meets the qualifications of a travel agency and is entitled to provide tourist services. Omnituras has not carried out activities as travel organiser since April 2005. The company has not created or sold its brand products, distributing only products of other companies. Remigijus Kertenis, who is the chief executive and key shareholder of Omnituras, said that his company quit as organiser of travels for some time, but would resume these activities in a few weeks. In Lithuania, Omnituras has about 200 domestic partners-tourist agencies.
Lietuvos Rytas, Respublika

Project got stuck
It is not quite clear yet whether the railway network Rail Baltica, which should connect Warsaw, Kaunas, Riga and Tallinn, will receive financing from the EU. This will be known only when the EU budget for 2007-2013 is approved. If the project receives EU financial assistance, the construction of Rail Baltica could start in 2008, which is what Lithuania has suggested, Pavelas Telicka, the coordinator of the project Rail Baltica, said after meeting with Petras Cesna, the Lithuanian transport minister.
"There are certain unresolved issues regarding the financing of EU transport projects, for example Rail Baltica, and the whole EU budget. They will not be solved as long as the EU budget for 2007-2013 is set. We hope that necessary funds will be allocated for Rail Baltica, but now all we can do is to wait," Telicka said.
Although the Baltic States support Rail Baltica, in Poland, there people who doubt that priority of this project among other projects to be implemented in the country. This project has been included on the list of priority objects to receive the EU financial assistance. The speed of the trains on Rail Baltica is expected to reach over 160 kilometres an hour.
Lietuvos Rytas, Verslo Zinios, Respublika

LAL to change the name
Lietuvos Avialinijos (Lithuanian Airlines, or LAL), the recently privatized Lithuanian flagship carrier, is mulling a possible change of name
"We would like to have our name sound the same both in Lithuania and abroad, so that foreigners would not have to speculate whether Lietuvos Avialinijos and Lithuanian Airlines is one and the same company," Vaidas Barakauskas, LAL board member, said. The new company's name would be introduced on September 15, he added.
LAL Investiciju Valdymas (LAL Investment Management), a company controlled by the information technology firm Fima and its partners, including investment company ZIA Valda and construction company Garantas, acquired the state's 100 percent stake in Lietuvos Avialinijos for LTL 25.578 million on August 16.
Lietuvos Rytas, Respublika

Monday, 12th of September

Vilniaus Vingis boost production of deflection yokes
Vilniaus Vingis, a Lithuanian manufacturer of electronics, is increasing the production of deflection yokes. "In September, the company is operating at 60 percent of its production capacity only; but the number of orders keeps growing and the final orders will be known within a month," Vaclovas Sleinota, the CEO of Vilniaus Vingis, said.
According to him, the number of orders for deflection yokes grew due to contracts with Ekranas, a domestic manufacturer of TV picture tubes, and foreign companies Samsung, Philips, Thompson and Panasonic.
Until the beginning of September, Vilniaus Vingis was working at 40 percent of its production capacity. This company, as well as other participants of the sector, were waiting for the international electronics trade fair which took place in Berlin on September 2-7.
The head of Vilniaus Vingis said that although the industry of liquid crystal display television is growing, the demand of traditional picture tubes would remain unchanged for at least five years.

Russia bans imports
Russia has banned imports of products of animal origin from the EU and third country via one of 14 Lithuania's logistics warehouses. Earlier Lithuania's authorities decided to suspend imports through one more warehouse. "Russia has banned the imports of products of animal origin via the storage sites of Girtekos Logistika. Some time earlier we suspended the imports to Russia via the warehouse of Klaipedos Saldytuvu Terminalas," Kazimieras Lukauskas, head of Lithuanian State Food and Veterinary Service, said.
Meanwhile, the news agency Reuters has reported that Russia may from Monday stop meat being transhipped into the country via Lithuania because some of it could be coming from origins on a banned list because of health and safety fears, a top veterinary official said on Friday.
Verslo Zinios, Respublika

Current account deficit
Lithuania's current account deficit reached LTL 2.41 billion in the first seven months of this year, down by 28 percent from the same period a year ago, the Bank of Lithuania has announced citing preliminary data. In July, however, the current account deficit rose by LTL 36.1 million from June to reach LTL 212.9 million.
Lietuvos Zinios, Verslo Zinios

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