Observer "Lietuva"

WEEK 6.2005

Saturday, 12th of February

Svyturys-Utenos Alus in the biggest retail trade chain of Spain
Svyturys-Utenos Alus, the leading player in the Lithuanian beer market, started selling Svyturys brand beer in the stores of El Corte Ingles, the largest retail network of Spain. The brewery is also elbowing its way to the Scandinavian markets. In Spain, the brewery is now selling Svyturio Ekstra, Svyturio Jubiliejinis and Svyturio Baltas beer brands.
"Spain is a very important partner not only because of potential sales, but also because there are so many Lithuanians living in that country,” Rolandas Virsila, the CEO of Svyturio-Utenos Alus, said.
According to the brewery, Spain is the ninth country to which it started to export Svyturys beer. The list of other overseas outlets includes the US, Canada, Great Britain, Ireland, Denmark, Iceland, Denmark, Latvia and Estonia.
Svyturys-Utenos Alus is the leading Lithuanian exporter of beer.
Lietuvos Rytas, Respublika

Minister of Transport invites low-fare air carries to Lithuania
Zigmantas Balcytis, Lithuania's Minister of Transport and Communication has invited eight leading European budget carriers to try out Lithuania's air travel market. The minister sent respective invitations to Ireland's Ryanair, British easyJet and BMI baby, Germany's Air Berlin, Virgin Express and German Wings, Belgium-registered Hapag Lloyd Express and Dutch FLYbe.
In particular, the ministry urged no-frill carriers to assess the advantages of Kaunas Airport, which operated a 3.25-kilometer long runway and was adapted for aircraft of any type.
So far, budget carriers tended to omit Lithuania in their expansion schedules. Ryanair appeared the budget carrier only to be interested in the market; however, the company demanded that domestic authorities provided it with numerous advantages, which some high-ranking public officers dismissed as hidden subsidies.
Kauno Diena, Lietuvos Zinios, Respublika

The aim of Hansabankas is LTL 155 million profit
Lithuania's Hansabankas aims to achieve a 40 percent profit growth this year and to become the country's number-one financial services brand by 2007 after posting an 82.3 percent rise in consolidated net profit to LTL 111.1 million in 2004. "This year our goal is to increase our profit by 40 percent to LTL 155 million," Hansabankas CEO Giedrius Dusevicius said. Dusevicius said that Hansabankas had the ambition to become number one in all major services groups.
Based on 2004 results, Hansabankas was outperformed by Vilniaus Bankas, its main rival, only in terms of business deposits, business loans, leasing, and payment card turnover. Hansabankas aims to keep its return on equity (ROE) above 20 percent this year (20.3 percent in 2004), lower its cost-income ratio to below 55 percent (59.1 percent last year), and keep risk cost below 0.5 percent (0.43 percent last year).
According to Hansabankas' estimates, it held a 22.2 percent share of the domestic loan market and 30.5 percent of the deposit market as of late 2004.
Kauno Diena, Lietuvos Zinios, Respublika

Friday, 11th of February

Sales of Gubernija dropped
The sales Gubernija, one of the largest breweries in Lithuania, amounted to LTL 59 million in 2004, an 8.7 percent decrease year-on-year. According to the data of the Lithuanian Brewers' Association, the sales of Gubernija in the domestic market dropped 1.1 percent from 2.5 million dekalitres to 2.48 million dekalitres during 2004. The market share controlled by the brewery, versus a year ago, decreased from 10.37 percent to 9.72 percent.
Verslo Zinios

Amplico Life to enter Lithuanian insurance market
Despite the forecasts of insurance experts about an eventual decrease in the number of the life insurers in Lithuania, a new player is about to enter the market. Amplico Life is a US capital company from neighbouring Poland. In spring, Amplico Life plans to have its subsidiary in the country. At the present time, the National Insurance Monitoring Commission has been considering the documents sent to it by the analogous insurance watchdog in Poland. The company is to offer all life insurance services in Lithuania except for pension accumulation.
Verslo Zinios

Turnover of Rimi grew in January
Rimi Baltic, a joint venture by Finland's Kesko Food and Sweden's ICA, reported sales of LTL 36.9 million in Lithuania for January, a rise of 6 percent from the year-earlier figure. Aggregate sales of Rimi Baltic, meanwhile, surged by 25 percent, year-on-year, to LTL 203.02 million. Rimi Baltic vows to expand its Lithuania's chain by 80 new retail outlets in the upcoming three-to-four year period. Moreover, the chain is projecting fast growth in all three Baltic countries and sounds eager to conquer some 25 percent of retail foodstuffs market in a three-year period.
As of early 2005, Rimi Baltic controlled a chain of some 160 retail outlets in the Baltic countries. In Lithuania alone, the venture held 27 trade centres Rimi and 3 Rimi hypermarkets.
Lietuvos Zinios, Lietuvos Rytas

Thursday, 10th of February

Successful January of Senukai
Senukai, Lithuania's largest retailer of building materials and household goods, posted sales of EUR 21.4 million for January, a rise of 28.2 percent year-on-year, Finland's Kesko, which controls the chain, has announced. Kesko Agro Lietuva, another member of the Kesko Group, boosted sales for January by 32.9 percent year-on-year to EUR 3.7 million. The company sells agricultural machinery and grain.
Verslo Zinios

Vilniaus Vingis may halt production
Vilniaus Vingis, one of Europe's leading producers of deflection yokes for TV tubes, posted a 21.6 percent decline in sales for January, to LTL 9.1 million from LTL 11.6 million a year ago. "The problems are the same as in December, as the market slowdown continues. Since we manufacture deflection yokes, we are dependent on TV tube producers, whose sales have fallen by more than 20 percent this year," Vilniaus Vingis CEO Vaclovas Sleinota said.
He said Ekranas, Vilniaus Vingis' main domestic customer, was planning to temporarily halt production in the near future. Samsung, another major customer, is also considering doing so. Vilniaus Vingis, which holds more than one-third of Europe's deflection yoke market, would then be forced to stop working as well.
It is likely that this situation is going to last until the Berlin electronics exhibition in June.
Respublika, Verslo Zinios, Lietuvos Zinios

Jump of Sonex was smaller than expected
Sonex Holding, the largest IT group in the Baltics, posted total revenues of LTL 231 million for 2004, a rise of 21 percent from revenues of LTL 191 million in 2003. However, the result fell short of the group's LTL 285 million revenue target.
Eladijus Kirijanovas, president of Sonex Holding, said this was due to the group's failure to carry out certain planned acquisitions, a delay in starting activities in Russia and worse-than-expected performance in Belarus. He also noted that prices for some IT products fell in 2004.
Lietuvos Zinios, Verslo Zinios

Wednesday, 9th of February

New winds in the competition of breweries
Svyturys-Utena Alus, the leading brewery in Lithuania, is the first domestic company in Lithuania to start using new generation PET bottles. According to an estimate, sales of beer bottled in these new PET containers should make up one-tenth of the beer in the new PET technology, which should help to preserve the freshness and quality of beer ten times longer. The Lithuanian brewery and the other companies owned by the Scandinavian concern Baltic Beverages Holding (BBH) - Aldaris of Latvia and Saku of Estonia - are the first brewers to use the technology in the Baltic States. BBH has invested more than EUR 1 million in PET in all three Baltic companies.
Meanwhile, Ragutis, a Kaunas-based brewery owned by the Finnish company Olvi, plans to start using multi-layered PET plastic bottles. These bottles will help improve the quality of the beer. Regular PET bottles allow oxygen in the air to get inside of the bottle and oxidize the beer. The beverage therefore loses its taste and aroma. The new bottles are made of several layers, preventing oxygen from getting inside the bottle.
Lietuvos Rytas, Respublika, Lietuvos Zinios, Verslo Zinios

French company to supply equipment for rail welding plant in Lithuania
On Tuesday, Gelmagis, a subsidiary of the national railway operator Lietuvos Gelezinkeliai (Lithuanian Railways) is going to sign a contract with the French company Geismar, which will be supplying equipment for a rail welding plant in Lithuania. The estimated cost of the plant, including the production and installation of the equipment, is LTL 20 million. The factory should open in about 18 months. Lithuania has been purchasing 25-metre-long rails in Russia and Great Britain, and 800-metre-long rails are welded at factories in Riga (Latvia) and Orsha (Belarus).
Lietuvos Rytas, Verslo Zinios

RST losses in 2004
Lithuania's Rytu Skirstomieji Tinklai (RST), the state-run operator of eastern part of national power grid, reported preliminary pretax losses of LTL 101.4 million for full 2004. A year earlier, audited net earnings came in at LTL 18.385 million.
"Excluding the revaluation of fixed tangible assets, the pretax earnings would be LTL 29.9 million. The figure is quite solid, however, it was affected by revaluation of certain assets," Arvydas Zakalskis, CEO of RST, said.
Upon revaluation of fixed tangible assets, the value of assets of the company surged 3.3 times, to LTL 2.4 billion, from LTL 725.5 million.
RST supplies electricity to 702,000 households in the regions of Vilnius, Panevezys, Alytus and Utena, and in certain parts of Kaunas and Marijampole regions.
Lietuvos Rytas, Lietuvos Zinios

Tuesday, 8th of February

Alita’s net profits up by 37 percent
Alita, Lithuania's largest alcohol producer, achieved a net gain of LTL 12.593 million in 2004, a rise of almost 37 percent since the last year when it came in at LTL 9.201 million. With 7 times slumped sales of concentrated juice but 5 percent larger sales of alcoholic drinks, the company posted a total turnover worth LTL 100.2 million during the previous year. The turnover was 6.5 percent lower than it was in 2003.
Vytautas Junevicius, the chief executive of Alita, indicated that the growth of profits every year resulted from consistent efforts to improve the quality of produce and invest into marketing. According to the chief executive of the company, the main competitive advantage of Alita is its popular brands and quality. Alita this year is set to focus on the needs of its loyal customers and the segments of the market where the company holds the lead, specifically in sale of sparkling wine, brandy and alcoholic cocktails.
Respublika, Verlso Zinios, Lietuvos Rytas

ABB to construct electric bridge
The Swedish concern ABB won an international tender to lay an electric cable under the sea between Finland and the Baltic states. The cable should be used to send electricity produced in the Baltic countries to the Nordic states. The amount of electricity is projected to reach as high as 2 billion kWh a year. The cable will also guarantee the purchase of electricity from the Nordic countries to cover a potential deficit of power in Lithuania, Latvia and Estonia.
The order for the construction of the undersea cable came from Nordic Energy Link, the company that is the manager of the project. The tender winner will have to lay a 100-km long cable, of which 70 kilometres will be under the sea. The project is to be completed by the end of 2006.
Lietuvos Zinios, Respublika, Lietuvos Rytas

Sales of Sanitas down by due to pricing
Sanitas, Lithuania's biggest pharmaceutical producer controlled by a group of private and corporate investors, reported LTL 1.925 million in turnover for January, a plunge of 36.7 percent from the year-earlier figure of LTL 3.039 million.
"Although the sales declined, the scale of manufacturing far exceeds last year figure. Thus, the drop in turnover should not affect the profit figure," Saulius Jurgelenas, Sanitas' CEO, said.
Following the pricing changes approved by Latvia's Grindex, the key customer of Lithuanian pharmaceutical customer, Sanitas' sales on foreign markets plummeted 35 percent, to LTL 1.431 million, from LTL 2.217 million in January 2004. Sales on domestic market plunged twofold, year-on-year, to LTL 394,000 in the first month of 2005. For 2005, Sanitas is projecting the net earnings of LTL 6 million on operating sales of LTL 38 million.
Verslo Zinios, Lietuvos Zinios

Monday, 7th of February

More flights to Moscow
The flagship air carrier Lietuvos Avialinijos (Lithuanian Airlines or LAL), slated for privatization, has extended its code-sharing agreement with the Russian national airline Aeroflot for this year's summer season. As a result of this, the number of available seats on the Vilnius-Moscow route will double, LAL said. Beginning late March, all ten weekly flights between Vilnius and Moscow will be operated with LAL's Boeing 737 aircraft. Aeroflot will have a certain number of available seats on these flights.
Currently, LAL uses a Boeing 737 for six weekly flights on this route, with another four flights operated with a Saab 2000.
Verslo Zinios

Slow services of Lithuanian post
State-run Lithuanian Post Office will have to improve service quality since the company delivers too little letters within one day after sending a letter. The Communications Regulatory Authority, a watchdog body for the domestic market, has released a report critical of the operations of the Lithuanian Post Office. It encouraged the company to improve the quality of services. The authority mailed 2,200 test letters, of which only 78.64 percent were delivered to their destinations in one day (requirement is 80 percent).
Verslo Zinios

18 food processors to export their production to Russia
The Russian State Veterinary Service has issued additional 18 export certificates to Lithuanian food processing companies. It has been previously stated that all inspected Lithuanian companies would get certificates; however, some of them withdrew their requests. So far, 33 Lithuanian food processing companies have had permissions export products of animal origin to Russia. Nevertheless, only 15 companies export their production to the neighbouring country at the moment.
Verslo Zinios, Respublika

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