Observer "Lietuva"

WEEK 51.2005

Saturday, 24th of December

Industrial sales increase
Lithuanian industrial sales grew by 7.1 percent in the first eleven months of this year compared with the same period a year ago. In November, industrial sales rose by 14.8 percent from a year earlier but fell by 12.2 percent compared with the previous month. On a seasonally-unadjusted basis, the monthly decline was 9.4 percent. Sales in the mining and quarrying sector and the manufacturing sector increased by 15.3 percent in the eleven-month period, year-on-year. Excluding refined petroleum products, the rise was 17.4 percent.
Respublika, Lietuvos Zinios

Unemployment level of Lithuania drops
The average unemployment level in Lithuania fell to 7.2 percent in the third quarter of this year from 10.6 percent in the same period last year. The department polled 9,900 people aged 15 and over. Amid rising emigration and growth in production and services, the number of people out of job declined by 55,300 or 32.2 percent year-on-year to 116,400. The number of unemployed young people aged 15-24 fell by 48.2 percent to 17,200 in the third quarter of this year. The unemployment level among young people dropped to 12.8 percent from 23 percent a year earlier as a result of increasing migration. The country's employed population grew to 1.492 million persons in the third quarter, 40,800 more than a year ago. The largest percentage of the population was employed in the services sector, 56 percent, industry, 20.7 percent, agriculture and forestry, 14.1 percent, and construction, 9.2 percent.
Lietuvos Zinios, Respublika

Sarkinas reappointed as Bank of Lithuania governor
The parliament on Friday appointed Reinoldijus Sarkinas to serve a third five-year term as the governor of the central Bank of Lithuania. Sarkinas, whose second term ends on Feb. 15 next year, was reappointed by a vote of 112 in favour, one against and one abstention. The chairperson of the Bank of Lithuania's board is appointed for a term of five years by the parliament on the president's recommendation. Sarkinas, 59, began his first term as the central bank governor on February 15, 1996 and was reappointed for a second term on February 23, 2001.
Respublika, Lietuvos Rytas, Lietuvos Zinios, Kauno Diena

Friday, 23rd of December

Mazeikiu Nafta fined EUR 9.3 million
The Lithuanian Competition Council has ruled that Mazeikiu Nafta abused its dominant market position when setting fuel prices in the Baltic countries and ordered it to pay a fine of LTL 32 million. Mazeikiu Nafta, which owns the only oil refinery in the Baltics, said it would challenge the decision in court. The Competition Council also ordered that Mazeikiu Nafta stop the practices violating competition laws.
"Mazeikiu Nafta continues these practices. Nothing will change in principle until a final decision is taken," Rimantas Stanikunas, Competition Council chairman, said.
The anti-monopoly authority announced its decision after a year and a half of investigation. Stanikunas said the Competition Council's experts had established that Mazeikiu Nafta had breached both the Lithuanian Competition Law and provisions of the Treaty establishing the European Community.
Earlier this week, Mazeikiu Nafta, which is controlled by Russia's embattled oil company Yukos, dismissed the accusations of market abuse. It said it had proved that the investigation had to be stopped and that the findings had to be rejected because of certain fundamental errors.
Respublika, Kauno Diena

Lithuanian Railways gets EUR 51 million in EU funds for upgrades
Lietuvos Gelezinkeliai, the state-run railway operator, intends to implement a GSM-R radio communication system under a 60.57-million-euro radio communication modernization project slated to be completed by 2010. The European Commission has allocated 51.439 million euros from the Cohesion Fund to help finance the project, the Financial Ministry said. That will cover 85 percent of the total project cost. The Lithuanian government is to contribute the remaining EUR 9.078 million.
Lietuvos Rytas

Governmnet may apply for higher borrowing ceiling to buy out controlling interest in Mazeikiai Oil
Lithuania's government may ask the parliament to raise the borrowing ceiling imposed for the buyout of controlling stake in Mazeikiu Nafta, the sole Baltic oil refining and transportation complex, from embattled Russia's oil company Yukos. The government might ask the parliament to raise the borrowing limit slightly as the LTL 3 billion ceiling currently in effect might not suffice, Prime Minister Algirdas Brazauskas said at Thursday's meeting with the members of parliament. The price of shares in the Lithuanian oil complex had increased since the launch of talks over the buyout of controlling interest in Mazeikiu Nafta, Brazauskas told the MPs. He did not specify the scale of additional borrowing, however.
Lithuania's government seeks to acquire 53.7 percent of Mazeikiu Nafta from Yukos for some LTL 3 billion for the subsequent sale of those shares to its favoured investor alongside some additional 20 percent stake in the sole Baltic oil refining and transportation complex.
Lietuvos Zinios, Verslo Zinios

Thursday, 22nd of December

Topo Centras opens 8th outlet in Latvia
Topo Centras, the leading Lithuania's household appliance and electronics trader, targets active expansion of its Latvia's chain, to which it will add five more stores in 2006. Topo Centras, which has recently opened a new outlet in Kaunas Mega mall, opened its 8th store in Latvia last weekend. The new 250-m2 store in Jekabpils ate up the investments of some LTL 300,000.
The chain opened three Topo Centrs stores in Latvia this year, said Diana Taletaviciene, CEO of Latvija's Topo Centrs. Investments into the three stores made up some LTL 1 million.
Topo Centras opened its first store in Latvia back in 2002. Currently it operates two Topo Centrs outlets in Riga, and one store in Daugavpils, Liepaja, Talsi, Tukums, Ventspils and Jekabpils each. The overall chain of Topo Centras covers 41 outlets, including 33 stores in Lithuania and 8 in Latvia. The chain employs a workforce over 500.
Respublika, Lietuvos Rytas

Vilkyskiai dairy to offer up to 30 parent shares on Vilnius bourse
Vilkyskiai dairy, the leading Lithuania's fermented cheese producer, aims to offer up to 30 percent of its shares on the Vilnius Stock Exchange (VSE) as the private company aims to go public by the end of 2005. The company would offer up to 10 percent of its shares in the initial public offering (IPO), Gintaras Bertasius, the company's CEO and top shareholder, said at Wednesday's news conference. In early 2007 the company would additionally float up to 20 percent of its stock.
Vilkyskiai dairy currently channels some 70 percent of its output for exports. The dairy sells over 2,000 tons of cheese on domestic market per year and holds some 15 percent of Lithuania's cheese market. The company's annual cheese output stands at some 8,000 tons, and is expected to grow to 10,000 tons shortly.
Verslo Zinios, Lietuvos Rytas, Respublika

Ryanair launches flights to Dublin
Ryanair, the Irish-based budget airline, said it would launch a new route from Lithuania's second-biggest city of Kaunas to Dublin starting April 28 next year.
This will be the airline's third route from Kaunas. The route will be operated three times a week with brand new 189-seat Boeing 737-800 aircraft.
Earlier this month, Ryanair announced a new route between Kaunas and Stockholm starting March 29. The airline launched its first route in Lithuania, from Kaunas Airport to London Stansted, on September 22 this year.
Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios

Wednesday, 21st of December

Three more companies will establish in Kaunas FEZ
The free economic zone (FEZ) of Kaunas is to settle up three more companies, including Maple Leaf Stadiums Baltic (MLS), the ice arena design and construction specialist, Nergamis, the stainless steel equipment maker, and Alegrus, the importer of consumer goods from India. MLS and the Kaunas FEZ manager concluded a contract on sublease of 1.2 hectares of land, which was mediated by real estate consultancy Colliers International, on December 15. MLS Baltic, the key subtenant of the land lot, is also engaged in installation, trade and technical maintenance of freezing, cooling, conditioning, weak current and other systems. Nergamis manufactures customized stainless steel equipment and products for the majority of Lithuania's food and meat processing companies. Meanwhile, Kausta, the construction company of Kaunas FEZ, has already launched the construction of logistics terminal. Elinta, the high-tech specialist, aims to expand its operations in the zone as well.
Lietuvos Zinios, Lietuvos Rytas, Kauno Diena

Minimal monthly salary will increase
Lithuania's Tripartite Council has finally voted to raise the minimum monthly salary to LTL 600 from LTL 550, on July 1, 2006, ending several months of tough negotiations.
The decision won the unanimous support of the council, which comprises the representatives of the government, trade unions and employer organizations.
The minimum salary of employees employed at companies, bodies and institutions under labour contracts will rise by LTL 50 or 9.1 percent. The minimum hourly remuneration rate will also increase by 9.1 percent, to LTL 3.58, from LTL 3.28.
According to the data made available by the Statistics Department, some 186,700 employees or 20 percent of total national labour force worked for the minimum monthly salary or even less (except those employed at sole proprietorships) in October 2004. The minimum monthly salary was last raised to LTL 550, from LTL 500, last July.
Lietuvos Zinios, Verslo Zinios, Lietuvos Rytas

Management changes in Rimi Lietuva
Paulo Peereboom will take over as country managing director at Rimi Lietuva, one of the largest retail chains in Lithuania, next February. Peereboom, 35, is supply chain and logistics director at Rimi Baltic, a joint venture between Finland's Kesko and Sweden's ICA. He joined the company in August 2003. He will succeed Inga Skisaker, 34, who has managed Rimi Lietuva for two years. Skisaker has decided to leave the company because she wants to spend more time with her family, Rimi Lietuva said in a statement.
Respublika, Lietuvos Rytas

Tuesday, 20th of December

Lithuanian compulsory auto insurance market falls by 3 percent
Lithuania's compulsory motor third-party liability insurance market declined by 3.2 percent year-on-year to LTL 229.194 million in the first 11 months of this year, the Insurance Supervisory Commission reported. In November compulsory auto insurance premiums written reached LTL 13.9 million, rising by 93.1 percent from LTL 7.2 million in the same period a year ago. Insurance companies paid out a total of LTL 108.1 million in compulsory motor insurance claims in January-November, 50.3 percent more than in the same period a year ago.
Lietuvos Zinios

Anyksciu Vynas climbs above the line
Anyksciu Vynas, Lithuania's largest wine producer, covered the losses accrued from January with the earnings achieved in October and November, and ended the eleven-month period with the pretax earnings of LTL 0.9 million. In November alone the pretax earnings came in at LTL 1.83 million on the sales of LTL 6.47 million. The revival mostly resulted on successful sales of juice concentrates. Eleven-month sales totalled LTL 32.4 million, a rise of 9.1 percent from the year-earlier figure.
Verslo Zinios

Lithuanian hotels enter Riga
Europa Group, a Lithuanian-owned hotel chain, expects to open a new hotel in the Latvian capital, Europa City Riga, next July, with planned investment of around EUR 5-6 million. Europa Group said it had signed a new franchise agreement with BBF Consulting, a Latvian real estate developer, over the Europa City Riga. The hotel is expected to have 147 rooms, up from the originally planned 80 rooms, and three or four conference halls.
The chain's first hotel in the Latvian capital, Europa Royale Riga, is planned to open next March. It will include 60 rooms, five banquet and conference halls, a sports and entertainment complex. The total investment will amount to LTL 24 million. The group intends to open a Europa Royale Hotel in the Lithuanian spa resort of Druskininkai next April and has plans to establish two hotels in Tallinn and a hotel in Kaunas in 2007-2008.
Lietuvos Rytas, Verslo Zinios

Monday, 19th of December

Lifosa lifts January-November sales
Lifosa, the largest phosphate fertilizer manufacturer in the Baltics, posted sales of LTL 557.151 million for the first 11 months of this year, a rise of 22.1 percent from the same period a year ago. Sales for November soared to LTL 52.015 million, almost a six-fold increase from a year earlier.
"The market typically slows down and demand for fertilizers falls during the autumn and winter months, but this year we managed to ward off the negative influence of the seasonal cycle," Lifosa CEO Regvita Ivanoviene said.
Lifosa's pretax profit for the first nine months of this year almost trebled to reach LTL 66.091 million. The company expects these favourable trends to continue next year. The Russian mineral fertilizer group Eurochem controls a 91.15 percent stake in Lifosa through its Cypriot-registered subsidiary Eolian Trading.
Verslo Zinios

Earnings of Vilniaus Baldai plunge
Vilniaus Baldai, the leading Lithuania's furniture producer controlled by investment holding Invalda, reported LTL 4.424 million in pretax earnings for the first eleven months of 2005, a plunge of 55.2 percent from the year-earlier figure of LTL 9.871 million. In November alone, the pretax earnings surged by 41.5 percent, year-on-year, to reach LTL 604,000, from LTL 427,000 in November 2004.
The furniture producer is projecting the earnings of LTL 4.42 million on sales of LTL 110 million for 2005. Verslo Zinios

Vivatrans was banned from transporting horses
Vivatrans, an animal transportation company registered in Alytus, was prohibited from transporting horses from Belarus into the EU after it was determined that it violated animal welfare requirements. A vehicle transporting horses arrived at the Medininkai veterinary border control post without having given prior notice. After an inspection, officials established that the transportation conditions did not meet animal welfare requirements.
In this particular case of non-compliance with animal welfare requirements, it was impossible to carry out a detailed veterinary check. The horses were watered and fed at the Medininkai control post.
The veterinary border control post in Medininkai is the only such post in Lithuania approved for the inspection of imported animals. This year some 300 horses have been imported into the EU through this post.
Verslo Zinios

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