Observer "Lietuva"

WEEK 8.2005

Saturday, 26th of February

MAZ to be exported
The MAZ assembly line in Vilnius is set to begin production of buses with a seating capacity of 28 passengers. MAZ Baltija has been producing MAZ trucks, mostly for the Russian and eastern European markets, since last September. Ziemgalos Automobiliai, an authorised dealer for MAZ, said in a statement that most of new generation MAZ-256 buses would be produced for the western European market. Lietuvos Rytas

More than half of residents inclined to evade imminent tax on real estate
Based on a poll of TNS Gallup, the Lithuanian residents who are likely to be subject to an anticipated new tax on real estate are inclined either to evade that tax or change their dwelling. The residents of small towns balancing on the line of poverty, though, say that they would pay the new tax, if any. According to the poll conducted for the Lithuanian Free Market Institute, a potential tax evader is a male 20-49 years of age, whose family receives a monthly income of more than LTL 400 for a member. The residents of townships, with a monthly family member's income of LTL 151-250, however, seem to be the most obedient with respect to the looming new tax in Lithuania. Less than half of the polled residents, 42.3 percent, indicated that they would pay the tax on their real estate. A fifth of the respondents, 20.6 percent, said they would not buy a large dwelling or change to a cheaper one. Another 21.1 percent are committed to search for various ways of evading the tax, and 16.1 percent answered that they would not seek any solutions: they would simply not pay the tax.
Respublika, Lietuvos Rytas

Finnish bank raised its stake in PST
Finnish Evli Bank, the owner of Lithuania's broker house Suprema, has approached Lithuania's Competition Council for a permission to raise its stake in Panevezio Statybos Trestas (PST), the leading domestic construction company, to 40 percent, from 33.34 percent. Evli Group purchased 33.34 percent in PST from Mindaugas Vegele, CEO of Spekonis Ir Gastonas brokerage, for LTL 13.628 million via the Vilnius Stock Exchange late in January. Evli Bank then acquired 10.15 percent stake, while Estonia's Suprema Securities bought 8.4 percent, Evli Baltic Equity - 8.42 percent, and Evli customers - the remaining shares in the Lithuanian construction company.
Lietuvos Zinios

Friday, 25th of February

Ragutis announces to have sold more beer
Brewery Ragutis, which is controlled by the Finnish company Olvi, sold 29.8 million litres of beer last year, 20.5 percent more than it sold in 2003.
Vytautas Meistas, CEO of Ragutis, said that Ragutis became the distributor of Heineken, a very popular brand of beer worldwide and that the brewery also strengthened its position in the cider market in 2004.
"We intend to grow this year as well, and we expect to introduce new products to the market. He have already started the production of a dark beer with a lower alcohol content called Horn Light, which will soon reach stores," Meistas said.
Ragutis plans to invest LTL 5 million in the construction of new warehouses, containers for filtered beer, and the modernization of its laboratory in 2005.
Verslo Zinios

Latvian Lauma will be more aggressive
Lauma, Latvia's largest lingerie producer, has said its sales in Lithuania rose by 9.8 percent in 2004, to LTL 1.354 million from about LTL 1.234 million in 2003. Lauma President Indreks Rahumaa said at a news conference in Kaunas on Thursday that the company expected to achieve a 15-percent growth in Lithuanian sales in 2005.
Lauma sells around one-fifth of its products in the Baltic countries. Lithuania accounted for around 28 percent of its Baltic sales last year, up by 3 percent year-on-year. Lauma underwear is currently available at 51 stores across Lithuania.
Verslo Zinios

Lithuanian textile company to control Ukrainian company
Utenos Trikotazas, Lithuania's leading knitwear manufacturer, successfully completed the acquisition of a majority interest in the Ukrainian knitwear producer Mriya on Wednesday. SBA that controls Utenos Trikotazas said that the company had bought a 67 percent stake in the plant in Mukachevo, in Ukraine's Transcarpathian region. The group intends to invest LTL 14 million in the plant in 2006. The value of the deal has not been disclosed.
Mriya is SBA's first production enterprise in Ukraine. SBA said they would seek both to retain Mriya's existing customers and attract new ones in Ukraine and Russia. The acquisition of the Ukrainian company is in line with SBA's goal of becoming the lowest-cost producer in Eastern Europe.
Lietuvos Rytas, Verslo Zinios

Thursday, 24th of February

Wages grew slightly in 2004
Average monthly gross wages in Lithuania rose by 7.9 percent in 2004, to reach LTL 1,157.8, the country's Statistics Department reported on Wednesday. The data cover the entire economy, with the exception of sole proprietorships. In the fourth quarter alone, monthly gross wages in the country averaged at LTL 1,310.2, a rise of 8.5 percent from the year-earlier figure. Average net monthly wages increased by 7.5 percent, year-on-year, to LTL 938.5. Real wages posted a rise of 4.3 percent during the period.
Average wages of male employees stood at LTL 1,448.6 per month in the October-to-December period of 2004, exceeding the average of female employees, which made up LTL 1,178.7. Average wages for male and female employees rose by 8.2 percent and 8.6 percent, respectively, on the year-on-year basis.
Monthly wages of manual workers averaged LTL 954 in the fourth quarter, up by 9.5 percent from the same quarter in 2003. Non-manual workers earned LTL 1,629.9 on average, a rise of 7.8 percent.
Respublika, Lietuvos Rytas, Verslo Zinios

Joint ticket network
Lithuania's ticket agency Tiketa, controlled by Rubicon Group, clinched cooperation agreements with Latvia's Bilesu Serviss and Estonia's Piletilevi, the leading ticket sellers in the neighbouring Baltic countries, last week. The ticket network established at the initiative of Lithuania's Tiketa will enable the sale of tickets to any events in the region in all three Baltic countries simultaneously. The network will be started up in the nearest future.
"The decision to unite Baltic ticketing systems will turn this market more attractive for world-scale artists and performers," Ernestas Kacerauskas, Tiketa acting CEO, said.
Lietuvos Zinios

Income of Stumbras plunged
Stumbras, one of Lithuania's leading alcoholic beverage producers, posted a net profit of LTL 6.387 million for 2004, down by 44.35 percent compared with 2003. Stumbras CFO Voldemaras Kallo said that the company's annual revenues fell by 4.8 percent to LTL 89.777 million in 2004. The company posted a net profit of LTL 11.477 million on revenues of LTL 94.33 million for 2003. Mineraliniai Vandenys, a subsidiary of MG Baltic, bought a 91.95 percent stake in Stumbras from the state in 2003 and has since raised its shareholding to 99.3 percent.
Lietuvos Zinios

Wednesday, 23rd of February

Participants of Eurovision ensured against defeat
Ergo Lietuva, one of the largest insurance companies in the country, has agreed to pay LTL 15 million if Lithuania is defeated in the Eurovision Song Contest. If Lithuanian representatives are not among the top ten performers of the song contest, Ergo Lietuva will invest the sum into the development of pop music in Lithuania. Saulius Jokubaitis, the CEO of Ergo Lietuva, said that if the Lithuanian contestants are defeated at the competition in Ukraine, the funds will go not to the Lithuanian performers, but to the Lithuanian Academy of Music and Theatre for the development of projects related to Eurovision.
The list of the finalists of the National Eurovision Song Contest includes the trio Ergo Fine, which is composed of three people working at Ergo Lietuva.
Lietuvos Rytas, Lietuvos Zinios

Profitable year for Klaipedos Baldai
Klaipedos Baldai, a furniture producer controlled by the concern SBA, earned net profits of LTL 3.85 million in 2004, 1.4 percent less than the amount earned in 2003. The company's pre-tax profits went up 2.3 percent to LTL 5.3 million last year. Net profits were below the estimate for 2004, even though the furniture manufacturer reduced its forecast from LTL 7.4 million to LTL 4.2 million. Last year the sales of Klaipedos Baldai amounted to LTL 118 million, 15.2 percent higher than sales in 2003, and became the largest furniture manufacturer by sales in Lithuania. In 2005, the company expects sales to advance 14.4 percent to LTL 135 million.
Lietuvos Zinios, Verslo Zinios

Visaginas lures construction workers
Visagino Statybininkai, company controlled by the Ministry of Economy, is committed to build a new plant of insulated metal panels with a workforce of 150-200 people. "The investments in the plant from mixed sources will make up around LTL 30 million. An application was also submitted for assistance of European Union structural funds," Arturas Dainius, secretary of the Economy Ministry, said. The authors of the project expect to receive LTL 17.27 million from the EU. Based on the estimate, Visagino Statybininkai will export 80 percent of its production to Ireland and Great Britain. The company manufactures metal panels for dwelling houses. Visagino Statybininkai has lately signed a contract with Fuchsia Home, an Irish company, concerning the acquisition of technologies and the delivery of produce. Visagino Statybininkai was set up in 2002, after its spinning off the nuclear plant. The company generates around LTL 20 million in annual income.
Lietuvos Rytas

Tuesday, 22nd of February

Insurance market shrank by nearly 3 percent
Lithuania's insurance market shrank by 2.8 percent in the first month of 2005, year-on-year, with total direct premiums written reaching LTL 70.463 million. Direct non-life premiums plunged by 7 percent year-on-year to LTL 51.866 million, accounting for 73.6 percent of overall premiums. Life insurance premiums rose by 11.1 percent to LTL 18.597 million, or 26.4 percent of total premium amount.
Insurance payouts totalled LTL 28.913 million in January, a surge of 41.6 percent from the year-earlier figure. Non-life insurers paid out LTL 25.862 million in claims (up by 48.7 percent), while life insurers paid out LTL 3.051 million (up by 0.7 percent).

Historic profit of the company amounts to LTL 722 million
Mazeikiu Nafta (Mazeikiai Oil), the sole Baltic oil refining and transportation complex controlled by embattled Russia's oil giant Yukos, reported a preliminary consolidated net profit of LTL 721.858 million under US Generally Accepted Accounting Principles (GAAP) for full 2004, a threefold surge from the year-earlier figure of LTL 230.249 million. In 2004 the Mazeikiai refinery processed some 8.66 million tons of crude and other feedstock, a surge of 21 percent from the year-earlier figure of 7.16 million tons.
“2004 was the most successful year in the company's history," Paul Nelson English, the CEO of Mazeikiu Nafta, reported.
He said that the successful results of the company were brought about by the additional amount of oil provided by Yukos and high refining margins. Last year the income of Mazeiku Nafta amounted to LTL 7.6 million, 1.4 times higher than income in 2003. Last year Mazeikiu Nafta handled 7.2 million tonnes of oil through its terminal in Butinge, an increase of 21 percent.
Lietuvos Rytas, Lietuvos Zinios, Verslo Zinios, Respublika

Sostena Auto increases capital
Sostena Auto, a real estate management company, is merging with ANTV, another real estate company, and increasing its authorized capital to LTL 17.3 million. The capital of the company is increasing because of a reassessment of the value of its real estate, Sostena Auto reported on Monday. Sostena Auto provides real estate management services for Sostena, one of the largest car dealerships in Lithuania. Sostena earlier reported that its sales increased 70 percent to LTL 78 million in 2004. Verslo Zinios

Monday, 21st of February

Billions for transport infrastructure
Lithuania expects to spend around LTL 4 billion to upgrading the national transport infrastructure in 2007-2013. The country counts on easing this financial burden with assistance from the European Union, which would cover half of the costs. Transport Minister Zigmantas Balcytis announced this on Friday, as he met two officials of the European Commission in charge of regional affairs - Jose Palma Andres and Enrique Buata Costa - in Vilnius. The transport minister spelled out a scheme focused on investments in the development of all transport sectors, specifically upgrading networks, traffic safety, and environmental protection. Other reforms will involve the reorganisation of border checkpoints at the external border of the EU and building new infrastructure for logistics centres.
Verslo Zinios

Milk purchase increased by 11 percent
Lithuanian dairy producers purchased a total of 90,400 tons of raw milk in the first month of 2005, a rise of 11.1 percent from the year-earlier figure of 81,400 tons, the country's Agriculture Ministry reported on Friday. The average raw milk purchase price in Lithuania reached LTL 583 per ton in January, a rise of 4.7 percent over one month. On a twelve-month basis, however, the average raw milk purchase price surged by 38.9 percent last month.
Verslo Zinios, Respublika

Lifosa expects EU assistance
Lithuania's phosphate fertilizer manufacturer Lifosa, controlled by Russia's mineral fertilizer group Eurochem, may kick off generation of steam from heat released during process reactions and eventually launch the production of electricity. The company would ask for some LTL 8 million in assistance from the EU structural funds for the project valued at about LTL 22 million, Jonas Dastikas, Lifosa CEO, said. With the EU assistance secured, the company might complete the project by the end of 2006.
Verslo Zinios

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