Observer "Lietuva"

WEEK 4.2005

Saturday, 29th of January

Cider Kiss replaces strong alcoholic beverages in bars
Svyturio-Utenos Alus, the leading brewery in Lithuania, sold 1.54 million litres of Kiss cider in 2004, an increase of 3.3 times from 2003. "One of the major reasons for such impressive growth in the demand for cider is that cider is gradually winning the battle with strong alcoholic drinks in local bars," Rolandas Virsilas, CEO of Svyturio-Utenos Alus, said.
According to data compiled by the brewery, the cider market in Lithuania grew 81 percent to 4.9 million litres last year. The market share of Kiss cider sold in bottles increased to 32 percent. Kiss won a 60 percent share of the market of cider on tap.
Respublika, Lietuvos Zinios

GDP grew by 6.6 percent, while prices – by 2.9 percent
Lithuania's economy s
Color urged by 6.6 percent in 2004, year-on-year, to LTL 61.801 billion, Algirdas Semeta, director of country's Statistics Department, announced at Friday's news conference citing preliminary estimations. In the fourth quarter alone, the country's gross domestic product (GDP) rose by 6.4 percent, to LTL 16.776 billion.
"Last year economic growth was driven by domestic demand. To retain the stable growth of GDP, we need to focus on boosting of exports and productivity," Semeta noted.
In 2004, GDP per capita stood at LTL 7,547 at current prices, a rise of 6.9 percent from the year-earlier figure. Similar to 2003, last year the growth rate was the fastest in manufacturing, wholesale and retail trade, maintenance of transport vehicles and motorcycles (at 10.9 percent each).
Annual inflation of 2.9 percent in 2004 followed two consecutive years of deflation. The annual rise in consumer prices largely resulted on surges in tariffs of transport and healthcare services, at 7.7 percent and 11 percent respectively.

Exports bring profits to Lietuvos Energija
Lietuvos Energija (Lithuanian Energy), the state-run power transmission company, has announced an unaudited pre-tax profit of LTL 109 million for full 2004, a rise of 21 percent from the year-earlier figure of LTL 90 million. Pre-tax profit figure came in line with the company's projections that the earnings before taxes would exceed LTL 100 million. The financial figure had been accounted excluding the costs of long-term tangible assets' reappraisal. Performance figures, including one-time costs, will be published in late March. Earnings on electricity exports accounted for about 50 percent of total profit.
Lietuvos Zinios

Friday, 28th of January

Growth of Baltic countries is likely to be slower
Baltic economies will continue to outdo other Eastern and Central European countries in terms of growth rate, the World Bank has forecast, warning, however, that the Baltic states will have to exert more efforts to secure growth in longer term. The World Bank experts have also singled out the ever increasing role of Russia and its capital in Lithuania's economy.
"In future the growth in the Baltic countries is likely to be slower than before. In longer term, the major challenges will result on demographic changes and a decline in jobs' supply. Moreover, the country will find it more difficult to retain the current rates of investment and productivity growth," the World Bank said.
The bank predicted that GDP in Lithuania, Latvia and Estonia would grow by some 5-6 percent per year in the nearest future. The bank associated faster growth in Lithuania, Latvia and Estonia, as compared with other EU newcomers, with low initial base, fast-track reforms and Russia's factor. The experts highlighted a decline in jobless rate and the emerging shortage of labour resources in their assessment of Lithuania's economy.
Respublika, Lietuvos Rytas

Standard & Poor's praises stability and reliability of Lithuania's banking system
Improvements in business environment, activities of regulatory authorities and bank performance figures have led to greater stability and reliability of overall Lithuania's banking system, international rating agency Standard & Poor's noted in its latest Lithuanian banking sector review. Moreover, the system grew more stable and trustworthy on the back of general economic growth, changes resulting on the country's accession to the EU, a rise in foreign capital and implementation of structural reforms, including privatization.
Despite a fast growth in credit portfolio of Lithuania's banks, its ratio with the country's GDP, at 21 percent, was the smallest among all EU newcomers. Thus, the rise in loan portfolio, backed by low interest rates and continuing economic development, should remain strong enough in short-term. The experts noted a significant rise in competition among Lithuania's banks, which had already been privatized in full. Competition turned even harsher as local commercial banking capital was 89-percent owned by foreign investors. Nordic institutions emerged to be the leading investors in Lithuania's banks.
Lietuvos Zinios

Vilnius projects investments
The municipality of Vilnius intends to allocate LTL 214.8 million from the budget for investments in 2005, 24 percent more than it allocated in 2004. The board of the city council approved the investment program on Thursday. Majority of funds, LTL 74.5 million, will be allocated from the privatisation fund of the municipality. EU assistance will cover LTL 59.7 million of the amount. The city also plans to borrow LTL 47.6 million for the investment program. The remainder of the money will come from the city budget (LTL 17.3 million) and the state budget (LTL 15.7 million).
According to the strategic plan for the city of Vilnius, most of the investments will go to the development of the city's infrastructure – LTL 103.8 million.
Verslo Zinios

Thursday, 27th of January

Investments will bring profits for furniture makers
Vakaru Medienos Grupe (VMG), a group of lumber companies, earned pre-tax profits of LTL 10.7 million last year. In 2003, the pre-tax profit of VGM amounted to LTL 719,000. Klaipedos Mediena, Giriu Bizonas, and Sakuona, the three companies controlled by VGM, increased their sales 16.3 percent to LTL 217.5 million in 2004.
The company invested LTL 31.8 million in 2004. VGM expects sales to reach LTL 267.2 million in 2005, a rise of 22.9 percent since 2004.
Lietuvos Zinios, Verslo Zinios

Akmenes Cementas will recycle 4,000 used tyres
The Environment Ministry has signed a contract with Akmenes Cementas, a local cement producer, concerning the recycling of used tyres. The deal binds the company to utilise 4,000 tons of tyre waste by December 31 2005. Out of the five bidders that sent in offers, Akmenes Cementas proposed the lowest charges for its services – LTL 94.4 for a ton. The contract is valid for one year, but may be extended for the following two years. The funds for collecting and recycling old tyres have been allocated from the program for the management of production and packaging waste. The budget of the tyre project totals LTL 1.56 million. The company expects to receive LTL 377.6 thousand revenues from the services this year. Akmenes Cementas is to invest LTL 3 million in the new activities.
Respublika, Lietuvos Rytas

The year was successful for new player on market
Tour operator Tez Tour, which stepped on Lithuania's market in fall 2003, reported a turnover of LTL 33 million for full 2004. "Last year the majority of tourists opted for more expensive hotels, which stimulated the growth of our turnover. In 2005 the market will expand by some 20-50 percent; however, our business growth will be much faster," Martynas Laivys, Tez Tour CEO, said.
The company's sales would surge by some 50-100 percent in 2005, while the customer ranks would grow to at least 30,000 people, from 20,000 in 2004.
Lithuania's market accommodates about 200 outgoing, incoming and local tourism operators.
Verslo Zinios

Wednesday, 26th of January

Two bidders in modernisation tender of Kaunas Hydro Power Plant
Lietuvos Energija, the government controlled operator of the national power transmission network, has unsealed envelopes with offers of the companies bidding to upgrade the Kaunas Hydro Power Plant. The value of the contract, depending on offers, may vary between LTL 70-80 million. The bidders include Swedish company Alstom Power, and a consortium of German firm Va Tech Escher Wyss, Austrian firm Va Tech Hydro Ag and Lithuanian company Iremas.
As a result of its modernisation in three years, the Kaunas Hydro Power Plant will lengthen service life by 25 years, increase the effectiveness and reliability of operation and improve environmental safety. The project may be co-financed by the EU, if the company secures the assistance. Lietuvos Energija has submitted application for support of LTL 30 million to the Lithuanian Business Support Agency. The other funds should come from Lietuvos Energija itself.
Kauno Diena, Verslo Zinios, Lietuvos Rytas

Lifosa took advantage of tendencies
Lifosa, the largest producer of fertiliser in the Baltic States, reported that its sales last year amounted to LTL 529.677 million, an increase of 22.6 percent. Such good results were possible because of the progress in the production program and stable supply of raw materials, Lifosa said. The fertiliser producer, which is under the control of the Russian concern Yevrochim, expected net profits to reach LTL 35 million in 2004.
Earlier reports indicated that the Kedainiai-based manufacturer of phosphoric fertilisers would spend about USD 24.1 million on investment projects in 2004 to 2006. The major part of the money, USD13.5 million, will be used for the construction of a feeding phosphate unit.
Verslo Zinios

Spanish retailers try out Lithuanian production
El Corte Ingles, a major Spanish retail chain, is busy selecting Lithuania' products to be traded in the chain outlets during the European Week campaign. As many as 19 Lithuanian companies, including the producers of meat products, confectionery and beer, have signalled willingness to introduce their products in Spain. El Corte Ingles preferred products that did not require refrigerators, said Audrone Ciapiene, adviser to Lithuania's ambassador to Spain. Lithuanian producers have been invited to participate for the first time ever. One Lithuanian meat producer has already shipped several tons of sausages to Spanish regions preferred by Lithuanian and Russians immigrants.
Verslo Zinios

Tuesday, 25th of January

Norfa settles in Kaunas
Norfos Mazmena, a supermarket chain in Lithuania, has reported that its sales grew 47.7 percent to LTL 923 million in 2004. At the present time, Norfa operates 88 outlets. On Friday, it opened a 4,000-m2 supermarket in Kaunas. The company earlier announced that it plans to expand its chain in Lithuania by another 30 stores in 2005.
The company also announced it expect its sales to go up to LTL 1.26 billion in 2005. Verslo Zinios, Lietuvos Rytas

Snaige expects EU aid
Snaige, one of Lithuania's most successful companies, expects to receive LTL 19.214 million in financial support from the EU structural funds to modernize the production of household and commercial refrigerators at its Alytus plant. "It seems that our project has passed the qualification stage and is currently waiting for approval," Giedrius Barysas, Snaige's board chairman, said. He added that they expected the project to be approved for EU financial support in the near future.
The Lithuanian Business Support Agency releases the names of all applicants for EU funding, but it does provide information as to whether a project meets the qualification requirements and whether it will be submitted for approval to the Economy Ministry's Business Project Selection Committee.
Snaige would use the funds to completely renew its range of household refrigerators and expand the production of commercial refrigerators. Barysas has said earlier that the project would be a significant technological step forward and would bring Snaige closer to the best-known brands.
Lietuvos Zinios

Vilniaus Baldai worked more profitably last year
Vilniaus Baldai (Vilnius Furniture), one of Lithuania's leading furniture manufacturers, reported pretax earnings of LTL 10.02 million for full 2004, a rise of 16.7 percent from the year-earlier figure of LTL 8.584 million. Initially the company scheduled the earnings of some LTL 7.5 million for full 2004. In 2005 the sales are projected to grow by 20 percent to some LTL 120 million.
Verslo Zinios, Lietuvos Zinios

Monday, 24th of January

Siauliu Bankas retains growth rate and exceeds profits
Siauliu Bankas, a regional commercial bank, earned unaudited net profits of LTL 6.5 million, an increase of 56.9 percent, in 2004. In 2004, the net profit estimate of the bank stood at LTL 6.5 million. The loan portfolio of Siauliu Bankas grew 33.2 percent to LTL 415.7 million in 2004. The amount of deposits and letters of credit went up 29.5 percent to LTL 517.2 million. Last year, Siauliu Bankas increased its authorized capital, which grew 2-fold by LTL 7.7 million to LTL 56 million. Siauliu Bankas does not have a strategic investor. In 2004, the shares of the bank belonged to several companies and individuals: Aiva (9.9 percent), Gintaras Kateiva (8.14), Alita (4.96), the investment fund East Capital (4.95), Mintaka (4.78), Siauliu Titanas (4.24), Darius Vysniauskas (3.72), Siauliu Plentas (3.29), Estonia's Hansapank (3.17), and Metalo Prekyba (2.65).
Verslo ZinioUkio Bankas’ group refused ambitions to alumina plant
Lithuania's Ukio Banko Investicine Grupe (Ukio Bank's Investment Group or UBIG) has opted to pull out of privatization of aluminium complex in Podrogica, Serbia and Montenegro. Valdas Varanavicius, UBIG Bosnian-Herzegovian project manager and Birac alumina plant chairman, said that the group had not submitted its bid during the bid acceptance period, which expired on Thursday.
He refused to comment on the move, yet, he admitted that the group might take another decision provided that the situation changed, and would follow the tender closely.
Verslo Zinios

Stevedoring operations in Butinge and Klaipeda decreased
The Russian ports of Primorsk and St Petersburg were the fastest growing ports in the Baltic Sea region in 2004, while the Lithuanian ports of Klaipeda and Butinge and Latvia's Liepaja reported a decline. St Petersburg last year handled 21.7 percent more freight (51.18 million tons) than it did in 2003. Primorsk loaded 44.56 million tons, an increase of nearly 52, Klaipeda State Sea Port reports.
The Butinge Oil Terminal in Lithuania recorded a decrease of 32 percent in stevedoring operations, which amounted to 7.24 million tons during 2004. Combined with Butinge, the port of Klaipeda reported 27.54 million tons of freight shipped, down 14 percent. Individually, Klaipeda last year attracted 4 percent less cargo, 20.25 million tons, largely due to a marked declining in the amount of grain shipped. The volume of this freight dropped 53 percent.

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