Observer "Lietuva"

WEEK 48.2005

Saturday, 3rd of December

In October, 112 agreements were signed for LTL 80.6 million of assistance from EU structural funds. The total number of the applications received in October was 244 and the total sum requested amounted to LTL 894.8 million. 214 applicants asked for assistance for projects related to research and the development of institutions, services, and infrastructure related to education.

New CEO of Nord/LB Lietuva/LB Lietuva
Werner Schilli will take over as chief executive officer of Lithuania's third-largest bank Nord/LB Lietuva, which is currently undergoing an ownership change, on December 31. Nord/LB Lietuva's management board elected Schilli, currently a member of the board and executive vice-president, as chairman of the board and appointed him as president of the bank on Thursday, the bank said in a statement.

New route from Palanga to London
Residents of the Western regions of Lithuania will not have to travel to Vilnius, Kaunas or Riga airports if they want to go to London. They will be able to fly to London from Palanga Airport. The first plane Boeing will take off from Palanga Airport on December 3. flyLAL, which started the operations in autumn, launched this new route.
Lietuvos Rytas

Friday, 2nd of December

'Wizz Air launches flights from Kaunas
Hungary's budget airline Wizz Air is launching flights from Kaunas on Friday, expecting to achieve an 80 percent load factor by next spring. Wizz Air is the second low-cost air carrier to operate flights from Kaunas Airport. Ryanair, the Irish-based budget airline, opened a route to the airport in September.
Natasha Kazmer, Wizz Air's public relations director, said that the company would operate flights from Kaunas to Warsaw and offer connections, via the Polish capital, to Paris, Liverpool, Dortmund, Malmo-Copenhagen, London and Stockholm. Depending on demand, Wizz Air will also consider starting direct flights from Kaunas to Britain, Germany and Ireland.
The airline's Airbus A320 aircraft will fly from Kaunas to Warsaw four times a week.
Wizz Air expects passenger numbers on its new route to reach around 50,000 next year. It has carried 2 million passengers this year in total.
Lietuvos Rytas, Lietuvos Zinios, Kauno Diena

Mazeikiai Oil sets refining target at 8.6 million tons
Mazeikiu Nafta, the sole Baltic oil refining and transportation complex still controlled by beleagued Russia's oil company Yukos, sees the supply and refining of crude reaching some 8.6 million tons in 2006. The executive management of Mazeikiu Nafta believes that the hardships suffered by Yukos would not affect the Lithuanian complex either in 2005, or in 2006.
In February, as Yukos suspended the supply of crude to Lithuania, Mazeikiu Nafta concluded contracts with four key Russia's suppliers, including Lukoil, TNK-BP, Sibneft and Rosneft, concerning the purchase of approximately 9 million tons of crude and a possibility to obtain additional 2 million tons in 2005.
Previously Mazeikiu Nafta said it targeted to refine 9.5 million tons of crude in 2005, a rise of 9.2 percent from the year-earlier figure. Throughput at Butinge crude terminal was scheduled to plunge by 30.6 percent, year-on-year, to 5 million tons, while transportation through Birzai pipeline was to shrink by 11.7 percent, to 17.4 million tons of petroleum products.
Verslo Zinios, Lietuvos Rytas

S.P.I. Group to buy Bennet Distributors
S.P.I. Group, international spirits producer and trader, aims to buy Bennet Distributors, the second largest Lithuania's spirits and tobacco importer. Baltijos Alkoholiniai Produktai, a subsidiary of S.P.I. Group, has already approached Lithuania's Competition Council asking for a green light to buy 100 percent of Bennet Distributors. Bennet Distributors, which shows businessman Benas Gudelis as its key shareholder, controls a subsidiary Darija, which operates Gerimu Pasaulis, the chain of spirits stores. Bennet Distributors reported LTL 185 million in turnover for full 2004, a rise of 6 percent from the year-earlier figure. Vilnius-based Baltijos Alkoholiniai Gerimai, which is controlled by SPI Worldwide Trade Limited, is an authorized dealer of Latvijas Balzams, which is a member of the same group. S.P.I. Group is controlled by Russia's vodka tycoon Yury Shefler.
Lietuvos Rytas, Respublika

Thursday, 1st of December

Government rejects plans to build cellulose plant
Lithuania's government has rejected an initiative to build a pulp mill in Lithuania and proposed to the parliament to annul its resolution, which included the mill project into the list of facilities with the status of national importance. The decision was taken following a review of raw timber demand forecasts until 2010 and the conclusion that local raw stuff would not suffice to meet the requirements of the new plant, the government press service has announced. Intentions to boost the wood chipboard production capacities have already been manifested by Giriu Bizonas, wood chipboard and furniture market players. According to the company's estimations, its chipboard sales could reach LTL 120 million. Poland's Kronospan could reach the annual sales of some LTL 70 million following the completion of new wood chipboard plant. Russia's Deko concern assumed the obligation to finance the design and construction of the new plant. The value of overall project would reach some EUR 800 million, while Deko aimed to process 1.5 million m3 of timber in Lithuania. Finnish and Swedish company Stora Enso, Finland's UPM-Kymmene and Swiss Mercer International, all enquired about possibilities to invest into the mill.
Kauno Diena, Lietuvos Rytas, Respublika

Retail sales soar
Lithuanian retail sales grew by 13.9 percent to LTL 18.4 billion in the first ten months of 2005, compared with the January-to-October period a year before. Textile, clothing and footwear traders posted the steepest rise, at 33.5 percent, in sales in the reporting period. The sales by furniture, illumination equipment, household appliances, radio and TV equipment, and building materials retailers soared by 28.2 percent. The turnover of restaurants, bars and other catering establishments soared by 23.4 percent, year-on-year, to reach LTL 617.9 million in the January-to-October period.
Kauno Diena, Respublika

GDP per capita increases in Vilnius and Klaipeda most of all
The average gross domestic product per capita grew in all regions of Lithuania in 2004, according to provisional figures from the national statistics office. The contributions of various regions to the GDP are quite diverse, however. As in earlier years, the gross domestic product per resident again advanced the most in the counties of Vilnius (144.3 percent) and Klaipeda (102.9 percent). Growth in the GDP per person in those counties was however somewhat slower than it was in 2003.
This figure was higher in Vilnius County due to increases of 32 percent in the financial brokerage sector, 13 percent for transport and storage companies, and 11 percent in the trade sector.
The Klaipeda County had the most rapid development in the trade and hotel and restaurant sectors. These sectors had gains of 20 percent and 24 percent in 2004.
Nonetheless, the contribution to the gross domestic product of four Lithuanian counties - Alytus, Marijampole, Siauliai, and Taurage - was 80 percent below the nation's average.
Kauno Diena, Respublika, Lietuvos Rytas

Wednesday, 30th of November

Lithuania produces 105,000 tons of sugar this year
Three Lithuanian sugar refineries have produced 105,000 tons of sugar this year so far, slightly exceeding the annual production quota of 100,290 tons. The national Lithuanian sugar production quota is 103,000 tons of white sugar; however, after sugar production quota declassification mechanism stepped into force in entire EU this year, Lithuanian sugar production quota declined to 100,290 tons for 2005.
Two companies operate in the Lithuanian sugar sector – Arvi Cukrus, which controls Marijampole Sugar factory, and Danisco Sugar, which controls sugar plants in Kedainiai and Panevezys.
Verslo Zinios, Lietuvos Rytas

Lithuanian accommodation industry raises guest numbers 17.3 percent
A total of 1.1 million people stayed at Lithuania's accommodation establishments during the first nine months of 2005, a rise of 17.3 percent from the year-earlier figure. Accommodation establishments of Druskininkai posted the largest - 49.2 percent - rise in guest numbers. The capital's hotels and guesthouses provided accommodation to a total of 357,300 visitors during the nine-month period, up by 19 percent year-on-year. The number of foreign guests grew by 18 percent, to 309,200, in the reporting period.
Foreigners, a rise of 14.8 percent, year-on-year, accounted for more than a half of guests who stayed at Lithuania's accommodation establishments. The number of guests from the EU member states increased by 18.5 percent. The average occupancy rate at Lithuania's hotels and guesthouses rose to 42.8 percent in the nine months of 2005, up from 38.2 percent a year ago.
Verslo Zinios

Lithuanians are more optimistic about financial situation
Lithuanians are more optimistic about their financial situation this month than they were in October, and fewer people anticipate a decline in the national economy. According to the findings of the Lithuanian Department of Statistics, 26 percent of people think that the financial situation of their household should improve in the next 12 months, 2 percentage points more than the number of people who felt this way in the previous month. 15 percent believe that their financial situation will deteriorate, up from 17 percent in October. More than half of the people polled (57 percent) said that the finances of their households should be stable in the next year. 27 percent of residents stated that the financial situation of their household grew better in the past 12 months, 18 percent indicated that it worsened, and 56 percent reported that the situation was stable. In October, these figures were 24 percent, 20 percent, and 56 percent respectively.
Respublika, Lietuvos Rytas, Lietuvos Zinios

Tuesday, 29th of November

Lithuanian salaries rise 9.4 percent in third quarter
Average salaries in Lithuania rose by 9.4 percent in the third quarter of this year from a year earlier and were up 3.6 percent compared with the second quarter. Average monthly gross earnings in the entire economy, with the exception of sole proprietorships, reached LTL 1,379 in the third quarter. Average salaries in the public sector increased by 9.1 percent year-on-year to LTL 1,425, while those in the private sector went up by 9.9 percent to LTL 1,347.5. On a quarterly basis, the growth rates were 2.2 percent and 4.7 percent, respectively. Real wages grew by 5.9 percent from the same period a year ago and were up 2.8 percent from the second quarter.
Kauno Diena, Respublika, Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios

DOT is due to take over aircraft and routes of Air Lithuania
Danu Oro Transportas (DOT), the fast growing Lithuania's carrier, by far established on foreign passenger and cargo markets, is taking over the routes of Air Lithuania and two planes of the collapsed Kaunas-based regional carrier. Moreover, DOT has launched talks with Property Bank concerning the takeover of the third aircraft of Air Lithuania.
"We have already concluded an aircraft lease agreement with Denmark's Nordic Aviation Contractors, which leased the planes to the Kaunas-based company," said Albertas Pocevicius, DOT deputy CEO.
The Danish company withdrew the planes from Air Lithuania, which failed to settle payments for the lease thereof. Meanwhile, DOT and Lithuania's Property Bank had launched talks concerning the takeover of the third plane of Air Lithuania.
For full 2004 the company reported LTL 0.3 million in audited net earnings on the sales of LTL 6.5 million. For 2005 the net earnings and the sales have been projected at approximately LTL 1.5 million and LTL 16 million, respectively.
Lietuvos Rytas, Kauno Diena, Verslo Zinios

Estonia supports construction of nuclear power plant
If Lithuania decided to build a new nuclear power plant, Estonia would be willing to contribute to the construction as well. The possibility of building a new nuclear power plant together was discussed at a meeting of Lithuanian Parliamentary Speaker Arturas Paulauskas and Estonian President Arnold Ruutel in Tallinn at the end of last week. Ruutel spoke about joint energy projects, expressed interest in the construction of a nuclear power plant in Lithuania. He thinks that Estonia could contribute to the construction, the parliamentary speaker said. In Paulauskas' words, it was not discussed what Estonia's contribution could be if the countries decided to build a nuclear power plant together.
Respublika, Lietuvos Zinios

Monday, 28th of November

Loan portfolio of credit unions advanced
The assets of the Association of Lithuanian Credit Unions (ALKU) increased 45.1 percent in the first 10 months of the year to LTL 260.4 million. According to an ALKU press release, its loan portfolio grew 46 percent to LTL 186.1 million, deposits went up 43.6 percent to LTL 207.1 million, and net profits amounted to LTL 1.47 million, an increase of 102.6 percent from this period of the previous year.
At the present time, 57 credit unions are members of the ALKU.
Verslo Zinios

Blue Bridge won tender of Sodra
IT company Blue Bridge has won a LTL 17.83 million order to install a document management system at Lithuania's State Social Insurance Fund (SoDra). The new system will be connected to the previously create module and will allow using additional functions and possibilities. The company will transfer documents to the new system and will train employees of Sodra.
Lietuvos Rytas

Leasing portfolio grew by one-fifth
Relying on the data of the Lithuanian Leasing Association, the Lithuanian leasing portfolio stood at LTL 4.8 billion in the end of the third quarter of 2005, a rise of 23.3 percent or LTL 905 million since the beginning of the year. The aggregate leasing portfolio soared by 36.3 percent compared to the third quarter of 2004. The growth of the leasing portfolio is associated with active investments into manufacturing and services sectors, positive expectations of businesspeople and residents, favourable leasing terms, flexible customer care and new leasing services.
Verslo Zinios

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