Observer "Lietuva"

WEEK 6.2006

Saturday, 11th of February

Topo Centras opens 9th store in Latvia
Topo Centras, the leading Lithuania's household appliance and electronics trader, has opened its new store Topo Centrs in Latvia's Cesis on Friday. The ninth store of Topo Centras in the neighbouring country covers the area of 250 m2. Investments into the new outlet exceeded LVL 110,000. 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, Jekabpils and Cesis each. Last year Latvia's retail chain Topo Centrs reported a 79 percent surge in sales, year-on-year. The overall chain of Topo Centras covers 43 outlets, including 34 stores in Lithuania and 9 in Latvia. The chain employs a workforce over 650.

Mazeikiu Nafta profit up 29 percent
Lithuanian oil refinery Mazeikiu Nafta, which is controlled by Russia's embattled oil company Yukos, posted a consolidated net profit of LTL 929.915 million for 2005, up 28.8 percent on 2004. Revenue soared by 45.6 percent to LTL 11.154 billion last year. Mazeikiu Nafta, which is the only oil refinery in the Baltic countries, processed 9.25 million tons of crude oil in 2005, up 6.8 percent compared with 2004. Its monthly output reached a record high of 863,000 tons last September. Oil exports via the Butinge terminal declined by 15.5 percent to 6.12 million tons, compared with 2004, but were 22.4 percent higher than planned. Mazeikiu Nafta's pipeline system transported 20.24 million tons of oil and diesel fuel, down 2.9 percent on the previous year.

Bets open on Lithuania's 2007 euro entry
Lithuania's chances of joining the euro early next year have not only become a topic of discussion among politicians and economists, but also a matter to bet on. Omnibet, a local betting agency, on Friday started taking bets on whether or not the country will adopt the single European currency at the beginning of 2007. The betting agency now gives even odds either way, but that may change depending on reports about the country's compliance with the convergence criteria. As it stands now, players will receive LTL 19 for every LTL 10 they bet if their selection wins.
Lietuvos Rytas

Friday, 10th of February

Lithuanian exports rise 27 percent, imports up 25 percent in 2005
Lithuanian exports grew by 27.1 percent to LTL 32.807 billion in 2005 compared with 2004, while imports rose by 25 percent to LTL 42.975 billion. The foreign trade deficit widened by 18.7 percent year-on-year to LTL 10.167 billion, according to non-final data based on customs declarations and Intrastat reports. In December, exports increased by 25.7 percent from a year ago, while imports went up by 28.1 percent. Month-on-month, exports fell by 7.3 percent and imports were down 7.4 percent.
The country's biggest export partner was Russia, accounting for 10.4 percent of last year's exports, followed by Latvia with 10.3 percent, Germany with 9.4 percent and France with seven percent. Russia also topped the import rankings with 27.8 percent of total imports. Other major import partners were Germany with 15.2 percent, Poland with 8.3 percent and Latvia with 3.9 percent.
Lietuvos Zinios, Verslo Zinios, Respublika, Lietuvos Rytas

Lithuanian firm says competitors behind Greek report on rotten milk
Lithuania's Marijampoles Pieno Konservai (Marijampole Canned Milk, or MPK) suspects that its competitors could be behind foreign media reports that the Greek military has recalled 97 tons of "rotten" canned milk produced by the Lithuanian firm.
"We exported around 900 tons of canned milk to Greece under a contract with Milkin, a local company, slightly more than a year ago. So far, we haven't received any complaints over the quality of the milk," MKP CEO Vidas Dumalakas said.
"It's very likely that this is pressure from our competitors because we pushed aside some major international dairy producers when we entered the Greek market," he added.
The Greek military had recalled 97 tons of troops' canned milk rations because the milk was unfit for consumption. An inspection team was reportedly appointed to conduct a chemical examination of the evaporated milk, which carried an expiration date at the end of 2006.
Lietuvos Zinios, Verslo Zinios

Yazaki Wiring Lithuania to hire 300 employees in Mazeikiai
Yazaki Wiring Technologies Lietuva, the wire manufacturer based at free economic zone (FEZ) of Klaipeda, has found a solution for its staff shortage as its has signed a cooperation agreement with Mazeikiai-based electric equipment producer Baltic Electrical Motors Company and aims to hire up to 300 employees in Mazeikiai shortly.
Currently the prospective employees in Mazeikiai are attending the training courses in Klaipeda where they are being trained the basics of work with wire production machines.
Lietuvos Zinios

Thursday, 9th of February

Lithuanian leasing market grows 37 percent in 2005
The Lithuanian leasing market grew by LTL 1.433 billion or 36.9 percent to LTL 5.32 billion last year. The total value of leasing contracts concluded during 2005 reached LTL 4.569 billion, a rise of 38 percent from 2004. The total amount of financing under new contracts soared by 42.3 percent to LTL 3.923 billion. SEB VB Lizingas, the leasing subsidiary of SEB Vilniaus Bankas, and the Hansabankas Group retained their leading positions in the market. SEB VB Lizingas' market share fell by 0.97 percentage points to 37.11 percent, while that of the Hansabankas Group rose by 1.82 points to 36.97 percent. Sampo Banko Lizingas was third with a 6.54 percent market share, followed by Nord/LB Lizingas with 6.09 percent and Snoro Lizingas with 3.99 percent.
Heavy road transport accounted for 31.3 percent of the leasing portfolio last year, industrial and technological equipment for 21.2 percent, motor vehicles for 19 percent, real estate for 17.9 percent, and office and computer equipment for 1.9 percent.
Kauno Diena

Electricity output slumps 23 percent in 2005
With the nuclear power plant in Ignalina (INPP) left with one operating unit from early 2005, the total electricity generation in Lithuania declined by 23 percent last year. Exports of electricity plunged by 44 percent, while the consumption of electricity on domestic market edged down by 0.8 percent.
Last year Lithuania's power plants generated 14.8 billion kWh of electricity, down from 19.2 billion kWh in 2004. Sales on foreign markets plunged to 4.1 billion kWh, from 7.3 billion kWh a year earlier.
Consumption on domestic market declined to 11.8 billion kWh, from 11.9 billion kWh in 2004, while power imports soared to 1.1 billion kWh, from 0.1 billion kWh a year earlier.
Lietuvos Zinios, Verslo Zinios

Passenger flow carried by Airbaltic from Vilnius surge 2.2 times
Latvia's Airbaltic, a member of SAS group, carried 32,122 passengers from Vilnius in January, a surge of 2.2 times versus the year-earlier passenger flow of 14,656. The number of flights by the company soared almost twofold, to 716, from 414 in January 2005, while the occupancy on planes from Vilnius made up 69 percent.
The company had emerged as the leader of air carriers active on Lithuania's market as it had surpassed over competitors in terms of passengers for two consecutive months, Tadas Vizgirda, CEO of Airbaltic's representative office in Lithuania, said.
Verslo Zinios

Wednesday, 8th of February

Lithuania's beer market edges up 0.8 percent in January
The Lithuanian beer market made up 14.41 million litres in January, a rise of 0.8 percent from the year-earlier figure. Svyturys-Utenos Alus remained the number one beer producer with a 46.84 percent market share, as its beer sales for January went up by 0.9 percent year-on-year to 6.75 million litres. Kalnapilio-Tauro Grupe was second with a 23.04 percent market share, 0.32 points down versus January 2005. The company's beer sales edged down by 0.6 percent year-on-year to 3.32 million litres in the reporting period. Ragutis raised January beer sales by 7.5 percent to 1.71 million litres and held a 11.87 percent market share.
Lietuvos Rytas, Respublika, Lietuvos Zinios

Rival of Sanitas makes tender offer for Jelfa
Enterprise Investors, which was outbid by Lithuania's Sanitas in a tender for a 47.83 percent stake in Jelfa, has announced a tender offer for the Polish pharmaceutical company on the Warsaw Stock Exchange at a price higher than Sanitas' offer.
Nevertheless, Sanitas, the winning bidder, expects to finalize a deal for the stake in Jelfa shortly.
"It would be a logical step to close a deal on the 47.83 percent stake in Jelfa with us," Sanitas CEO Saulius Jurgelenas said.
He said that Enterprise Investors' move was no surprise to Sanitas because there had been speculation about a possible tender offer. Enterprise Investors offers to buy 66 percent of Jelfa shares for a price of PNL 90 per share. The tender offer period begins on February 15 and ends on February28.
Sanitas bid PLN 87.1 per share, topping Enterprise Investors' offer of PLN 75-77.
This acquisition would give Sanitas, which currently owns over 8 percent of shares in Jelfa, control of the Polish pharmaceutical plant. The Lithuanian company is ready to make a tender offer for all outstanding shares.
Lietuvos Rytas, Lietuvos Zinios, Verslo Zinios

Kazakhs and Poles bid for refinery stake
Lithuanian Prime Minister Algirdas Brazauskas confirmed on Tuesday that two companies, Kazakhstan's KazMunayGaz and Poland's PKN Orlen, had submitted bids for Yukos' majority stake in Mazeikiu Nafta.
"We don't now yet what price the Polish company is offering for the shares in Mazeikiu Nafta, but that should become clear within the next few weeks," Brazauskas said.
Russia's struggling oil giant Yukos, which is selling its 53.7 percent stake in the Lithuanian refinery, would not provide any information until the evaluation of the offers is completed. KazMunayGaz has said that it offered USD 1.2 billion for Yukos' stake in Mazeikiu Nafta and that it intends to buy a stake from the government under the same terms. The Poles reportedly bid around USD 1.5 billion, but their offer is conditional.
Lietuvos Zinios, Lietuvos Rytas

Tuesday, 7th of February

Ekranas seeks for government backing in talks with banks
Ekranas, embattled Lithuania's manufacturer of colour picture tubes (CPT), faces a major threat to survival as the commercial banks refused to extend any new financing to replenish the company's circulating funds last Wednesday. On Monday the company tried to convince the commercial banks executives to revoke the decision at the meeting hosted by the Ministry of Economy and attended by government representatives. Orijana Jakimauskiene, the public relations adviser to the Minister of Economy, has confirmed that the meeting, which was attended by Economy Minister Kestutis Dauksys, took place on Monday morning.
Ekranas faced similar difficulties in fall of 2005 as the creditors refused to extend any new financing and demanded that Ekranas should launch the repayment of earlier bills. The arrears of the CPT manufacturer to the commercial banks currently exceed LTL 200 million.
According to unofficial sources, SEB Vilniaus Bankas alone had extended some LTL 100 million to Ekranas. The whole amount or a part thereof may slip into the bad loan category this year.
Ekranas reported over LTL 60 million in losses for the first nine months of 2005. The company lost a significant part of its market share to CPT producers from Asia. Kauno Diena, Lietuvos Zinios, Verslo Zinios, Lietuvos Rytas

Lietuvos Energija earnings plunge 6.5 times in 2005
Lietuvos Energija, the state-run power transmission grid operator, reported LTL 16.8 million in non-consolidated pretax earnings, a plunge of 6.5 times from the year-earlier figure of LTL 111.3 million. However, the last year's profit figure far exceeded the forecasts as the experts projected that the company would end the year in the red owing to smaller exports of electricity and the rise in deterioration costs. The company's earnings before interest, tax, deterioration and amortization (EBITDA) edged down to LTL 176 million, from LTL 179 million in 2004, while the EBITDA margin declined to 18.5 percent, from 18.8 percent a year earlier. The company's revenues slipped to LTL 953 million, from LTL 958 million in 2004.
Lietuvos Energija's sales of electricity on foreign markets plunged by 3.3 billion kWh, to 4 billion kWh last year. Electricity transmission on domestic market climbed by 4.2 percent, year-on-year, to 9.1 billion kWh.
Respublika, Verslo Zinios, Lietuvos Rytas

Ad Rem setting up joint venture with UK Delamode
Ad Rem, Lithuania's logistics and transportation group, and its UK rival Delamode have set up a joint venture Delamode Ad Rem for the transportation of cargo from UK to the Baltic and CIS states and vice versa.
"We are scheduling specific steps for the consolidation of transportation capacities of the companies and introduction of other logistics services," Stanislovas Kozelas, Ad Rem CEO, said.
The new company would convey cargo from UK and Ireland to Lithuania, Latvia, Estonia and CIS countries, including Russia, Kazakhstan, Ukraine, Belarus and the Causasus region.
Ad Rem group reported LTL 38 million in sales for full 2005, a surge of 49 percent from the year-earlier figure of LTL 25.5 million.
Verslo Zinios, Lietuvos Rytas

Monday, 6th of February

Lithuania implementing LTL 1.916 billion worth projects with EU assistance
A total of 1,413 projects with a combined value of LTL 1.916 billion were being implemented in Lithuania with the assistance from the EU structural funds as of late 2005. The value of projects comprises almost a half of the total sum of assistance as set out in Lithuania's Single Programming Document (SPD) for 2004-2006. In December alone, the authorities concluded 109 contracts for the overall assistance of LTL 79.112 million.
Verslo Zinios

Elsis boosts turnover
Lithuania’s information, telecommunications and technological processes automation company Elsis reached a turnover of LTL 72.1 million in 2005, a rise of 34.8 percent year-on-year. The growth is associated with big tenders in the state sector won by Elsis Biuro Sistemos as well as the lasting projects of Elsis TS in defence electronic field.
Lietuvos Rytas

Lithuania and Yukos make no progress in talks on Mazeikiu Nafta
The Lithuanian government reported no progress in its talks with Russia's beleaguered oil giant Yukos on the acquisition of a majority stake in Mazeikiu Nafta and cancellation of certain agreements.
"The problems that we have with this transaction remain unsolved," Nerijus Eidukevicius, deputy economy minister and a member of the government's negotiating team, said.
Eidukevicius and Saulius Specius, another member of the team, held talks with Yukos president Steven Theede in London on Thursday.
The vice-minister said that they agreed to meet again in Vilnius next week. The official said that the negotiators had received information about the ongoing sale by Yukos of its 53.7 percent stake in the Lithuanian refinery, but he would neither disclose the names of bidders nor say how much they had bid, citing confidentiality reasons.
Other sources in Vilnius confirmed that only two companies, Kazakhstan's state-owned oil and gas company KazMunayGaz and Poland's PKN Orlen, submitted bids for Yukos' stake last Friday. Both companies confirmed last week that they were bidding.

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