Observer "Lietuva"

WEEK 43.2005

Saturday, 29th of October

Ekranas’ losses shock the market
Ekranas, Lithuania's struggling manufacturer of colour picture tubes (CPT), posted a loss of LTL 60.7 million for the first nine months of this year, versus a net profit of LTL 7.8 million a year earlier. Sales for January-September slumped by 37.4 percent year-on-year to LTL 228.6 million. As a result of a marked increase in demand for CPTs, Ekranas has 43 percent more orders for the fourth quarter than it had for the third quarter. Three technological lines are currently operating at the TV tube plant in Panevezys, in central Lithuania. With the upward trend in the market forecast to continue, the company expects to have four technological lines operating next year.
The CPT manufacturer's net profit dropped to LTL 1.29 million last year. At the start of this year, it projected annual losses of LTL 10 million due to negative trends in the global market.
Lietuvos Zinios

Record profit of Mazeikiu Nafta
Lithuanian oil refinery Mazeikiu Nafta, which is controlled by embattled Russian oil giant Yukos, reported a consolidated net profit of LTL 776 million for the first nine months of this year. The financial result, reported under the International Financial Reporting Standards, is up 73.2 percent from a net profit of LTL 448.2 million, under US GAAP, in the same period a year ago.
Lietuvos Rytas, Lietuvos Zinios

Local market boosts economy
The gross domestic product of Lithuania increased 6.9 percent in the first nine months of 2005 to LTL 51.517 billion at current prices. Preliminary figures reveal that in the third quarter alone, the GDP increased 7.6 percent year-on-year to LTL 19.143 billion. According to the statement released by the Statistical Department, almost all the types of activities, except agriculture, mining and query exploitation, had effect on the increase in GDP in the third quarter.
Respublika, Lietuvos Zinios

Friday, 28th of October

Rautakirja told to split periodicals distribution, marketing activities in Lithuania
Finland's Rautakirja has been allowed to acquire the Vilnius agency of Lietuvos Spauda, the operator of the leading kiosk chain in the country, however, the periodical distribution and marketing activities shall be pursued by two independent companies, the Competition Council has ruled as it gave a green light for this transaction with certain reservations. Companies within the group of Vilnius agency of Lietuvos Spauda will take up the retail trade in kiosks, while the periodicals distribution activities shall be transferred to Impress Teva, a press distributor under Rautakirja's control. Moreover, Rautakirja has been obliged to apply a system of commissions that would be non-discriminatory, transparent and equal for all publishers, and would be based on the criteria set out in the decision of the competition panel. The panel adopted its decision considering the opinion of publishers of the leading dailies, including Lietuvos Rytas, Respublika, Verslo Zinios and Lietuvos Zinios, as well as several regional publishers and the Confederation of Lithuania's Business Employers. Verslo Zinios, Lietuvos Rytas

Commercial banks advised to step up risk management
With Lithuania experiencing a rapid rise in the loan portfolios of domestic commercial banks, the nation's central bank has drawn attention to the risk management of financial institutions. The board of the Bank of Lithuania has issued a recommendation for commercial banks to follow "conservative principles" in calculating the value of assets and the amount of assumed risks. It stated that these precautions are needed to react to unfavourable changes in the market.
The loan portfolio of the Lithuanian banking system swelled 46.5 percent to an overall LTL 22.435 billion in the year to September 2005. The amount of special provisions advanced 87.2 percent to LTL 203 million in this period. Domestic commercial banks earned combined net profits of LTL 275.5 million in the first three quarters of 2005, an increase of 26.8 percent year-on-year.
Respublika, Kauno Diena, Lietuvos Zinios

Bank will issue loan for trolleybus purchase
The authorities of Kaunas aim to borrow up to EUR 15 million from the European Bank for Reconstruction and Development (EBRD) to fund the purchase of new trolleybuses.
The protocol of intent concerning the loan for the purchase of 50 trolleybuses was signed on Thursday. The signatories included Matti Hyyrynen, head of EBRD office in Vilnius, Paulius Keras, head of transport division of the Kaunas local authority, and Algirdas Krivickas, CEO of Autrolis, the trolleybus operator controlled by the local authority. The precise amount of the loan would be known following the completion of trolleybus supplier tender. The winning tenderer should be announced in spring 2006, and the new trolleybuses would show up on the streets of the second-largest Lithuania's city in fall, Keras said.
Kauno Diena

Thursday, 27th of October

LAL is indebted to Vilnius Airport
The debt of Lietuvos Avialinijos, a loss-operating company sold by the government to a private owner this year, to International Vilnius Airport has reached LTL 20 million. LAL has stopped paying passenger, landing charges, transport and communal charges to the airport since April. Thus, the debt has reached LTL 13 million. Another LTL 7 million accounts for the debt of the flight operator, which accumulated in previous years. LAL, the airport said in its statement it would like to restructure the debt and postpone its payment for a few years. But the biggest share of it could be paid in the nearest period, it added.
The Vilnius Airport does not rule out a possibility to resort to extra measures with regard to LAL – to stop supply of electricity and water to some units of the flight operator even if this will cause inconveniencies to passengers.
Respublika, Respublika, Lietuvos Rytas, Verslo Zinios

Anyksciu Vynas works detrimentally
Anyksciu Vynas, the leading Lithuania's winemaker, posted LTL 3.047 million in losses for the first nine months of 2005, a rise of 1.6 times from the losses of LTL 1.896 million in the respective period of 2004. Nine-month sales came in at LTL 19.39 million, a plunge of 23.8 percent from the sales of LTL 25.454 million posted for the January-to-September period a year ago.
Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios

VP Market will build Akropolis in Bulgaria
Sofijski Akropolis, a Bulgaria-based subsidiary of Vilniaus Akropolis, the owner of the largest Baltic commercial and entertainment mall, has acquired a land lot in the capital of Sofia.
"The land lot will accommodate a commercial and office complex. This is an investment into a fast-growing market, which will see a lot more of our projects," Mindaugas Marcinkevicius, Vilniaus Akropolis chairman, said.
The company has already concluded a preliminary contract on the purchase of 19.7 hectares land lot with Balkancar 6-Ti Septemvri.
The land lot, which previously accommodated a Balkancar plant, is located close to the center of Bulgaria's capital, near the major highway connecting the centre of Sofia with residential areas.
Respublika, Verslo Zinios, Lietuvos Rytas

Wednesday, 26th of October

Lithuanian vodka will be advertised abroad
Almost LTL 10 million in EU aid is planned to be spent on promoting Lithuanian alcoholic beverages in the US, Russia, Australia, Israel, Ukraine and Canada. The Lithuanian Agricultural and Food Products Market Regulation Agency, which administers intervention purchases and other measures, said that the European Commission had taken a preliminary decision to allocate the funds. The three-year program will aim at increasing the information on, and sales of, Stumbras' Original Lithuanian Vodka and Vilniaus Degtine's Vilnius Gin and Cepkeliu Brandy in third countries. Under the EU rules, the EU covers 50 percent of the program costs. The member state contributes 20 percent and the aid recipient contributes 30 percent.
If the program is approved, LTL 2.7 million will be allocated in the first year, LTL 3.8 million in the second year and LTL 3.4 million in the third year.
Lietuvos Zinios, Lietuvos Rytas

Citygroup invests additional EUR 10 million
Citigroup Venture Capital International (CVCI), a private equity investment unit of Citigroup, intends to invest an additional EUR 10 million in Lithuania's second-largest grocery chain Iki. Iki said CVCI would buy shares, both existing and newly issued, in Palink, the operator of Iki supermarkets, Ikiukas convenience stores and Leader Price discount stores in Lithuania and Latvia. The Ortiz brothers from Belgium will retain a controlling stake in Palink after the additional investment.
This will bring Citigroup's total investment in Palink to EUR 50 million, with EUR 7.5 million co-invested by Amber Trust, an equity fund managed by Danske Capital Finland and Firebird. CVCI invested EUR 40 million in Palink in February of this year, with an option to invest another EUR 10 million.
Palink will use the money to further expand its retail operations in Lithuania and Latvia. In April, it signed an agreement with the French Casino Group to create a chain of Leader Price discount stores in the Baltics.
Lietuvos Rytas, Respublika, Verslo Zinios

Girteka invests in Ventspils
Girteka, Lithuania's logistics company, aims to set up a frozen foods import terminal in Ventspils, Latvia, which would serve as a transshipment facility to convey the products imported from the US and Western Europe to Russia, Ukraine, Belarus and Kazakhstan. Investments into the construction of the terminal were expected at some EUR 20 million, said Mindaugas Raila, Girteka CEO.
"We have opted for Ventspils on the back of favourable geographic position of this port, the possibilities of conveyance of products from that location and transportation costs," Raila said.
The project would be split in two stages, the first of which, due to be completed in late 2006, would involve the building of the first storage facility that would eat up the investments of some EUR10-12 million. The second storage facility should be completed by 2008.
Verslo Zinios

Tuesday, 25th of October

Ryanair cancelled London-Kaunas flights
Irish low-fare airline Ryanair has cancelled three flights between Kaunas and London. It is believed that the cancellation is related to a strike a month ago at the aircraft producer Boeing, leading Ryanair to have a shortage of aircraft. The foreign airline will not operate flights in Lithuania next Friday or Sunday. The flight of this firm scheduled for the previous Saturday was also cancelled.
In a press release, the airport in Kaunas released this information and also stated that the cause of these changes was not known. "We have not received any additional information," Kestutis Cucenas, the director of the airport, said.
In September, the Irish company warned that the strike at Boeing would delay the delivery of seven new aeroplanes, which might forced the airline to cancel 200 flights this month.
Lietuvos Rytas, Kauno Diena, Respublika

Shiping company boost profit
Limarko Laivininkystes Kompanija, Lithuania's private equity shipping operator, reported LTL 12.5 million in net earnings for the first nine months of 2005, a surge of 3.2 times from the year-earlier figure. Nine-month turnover of the company rose by 45.9 percent, year-on-year, to reach LTL 66.2 million. The company's investments into the upgrade of its fleet should reach some LTL 30 million this year as the operator aims to acquire two or three new ships, most likely bulk carriers.
Lietuvos Zinios

Milk processors saw lower profits
Pieno Zvaigdes, a leading dairy group in Lithuania, earned pre-tax profits of LTL 13.1 million in the first three quarters of 2005. This figure is 32 percent less than it was in the same period of the previous year. Consolidated income of the dairy group however advanced 11.8 percent to almost LTL 317 million. The company has forecast that annual turnover will reach nearly LTL 470 million.
Lietuvos Zinios

Monday, 24th of October

Pohjola eyes on Baltic Polis
Baltic Polis, a Lithuanian non-life insurance company, will most likely be taken over by Finnish finance group of Pohjola, which is represented in Lithuania by Seesam insurance companies.
"The project over the share sale of Baltic Polis to Finnish Pohjola has not been completed yet and reports about Austrian concern of QBE are wrong as the stockholders of Baltic Polis had no contacts with the concern," the statement by Baltic Polis read.
Baltic Polis belongs to Parekss Apdrosinasana Kompanija and the latter is a part of Parekss Banka group. According to the report in the Latvian media, Parekss Banka, one of the leading banks in Latvia, is selling its insurance businesses in Latvia and Lithuania, where it controls the non-life insurance firm Baltic Polis. Verslo Zinios

Factoring portfolio grows
The growth of economy this year has led to an increase of the factoring services, one of the tools of short-term financing. The factoring turnover of the members of the Lithuanian Leasing Association amounted to LTL 4.02 billion, an increase of 74 percent compared to the similar period in the preceding year. The factoring portfolio was LTL 913.36 million in nine months, a year on year increase of 54.7 percent. The domestic factoring portfolio reached LTL 691.4 million and international factoring portfolio was LTL 222 million.

The number of internet banking users increases
The number of users of electronic banking services went up to 1.2 million in nine months of the year, 42 percent more than the number of people using these services in the same period of 2004. SEB Vilniaus Bankas had the largest number of clients using these services and second place went to Hansabankas. At the end of 2004, commercial banks in Lithuania had around 926,700 registered online customers.
Lietuvos Rytas

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