Observer "Lietuva"

WEEK 7.2006

Saturday, 18th of February

Danisco is not to close plants in Lithuania
Danish company Danisco Sugar is to continue operations in Lithuania and retain the present production level in the plants Danisco Sugar Kedainiai and Danisco Sugar Panevezys. In 2006 the company plans to close sugar plants in Denmark, Sweden and Finland, to sell parts of the sugar quotas in Sweden and Finland, purchase additional quota for sugar plant in Germany and review and optimize functions of organization administration.
Last year sugar factory in Kedainiai produced 44,000 tons of sugar while Panevezys-based plant produced 48,000 tons. Production efficiency in Kedainiai amounts to 3.200 tons per day and in Panevezys – 3.900 tons.
In the words of Saulius Mozeris, agricultural director of sugar plants in Kedainiai and Panevezys, the growers will be forced to boost sugar beet yield and cut the costs due to EU sugar reform.

Milk sales
Farmers received LTL 60 million for their sold milk to milk-processing companies in January, a rise of 14 percent (LTL 7.4 million) compared to the first month of 2005 when the income for milk stood at LTL 52.6 million. The average milk purchase price amounted to LTL 748 per ton, 5 percent higher year-on-year. A total of 80.2 thousand tons of natural fat milk was purchased over January, an 8.5 percent increase since the same period a year ago.

Growth of flat prices
Flat prices in Lithuania have exceeded those on Tallinn, Estonia, amidst of rapidly increasing real estate prices in January. Relying on the data of internet website, flat prices in Vilnius jumped by 10 percent in Vilnius, 8 percent in Kaunas and even 18 percent in Klaipeda solely in January 2006. One square meter of old construction flat in Vilnius costs over LTL 5,000. In Klaipeda, the prices have already reached LTL 4,000 per square meter and LTL 3,000 in Kaunas.
Kauno Diena

Friday, 17th of February

Vilniaus Vingis LTL 5.77 million in red in 2005
Vilniaus Vingis, one of the EU's leading manufacturers of electronic components suffering from a downturn on its key markets, reported LTL 5.77 million in preliminary losses for full 2005, slightly above the LTL 5.5 million losses projected by the executive management. For 2006 the company is projecting the pretax earnings of LTL 1.1 million. Moreover, the electronics producer raised its revenues forecasts to LTL 89 million, from LTL 67 million.
Vaclovas Sleinota, CEO of Vilniaus Vingis, attributed the losses to the growing prices of copper, due to which the company incurred LTL 2.5 million losses. Besides, 900 employees were dismissed and had to be paid allowances that accounted for LTL 1.5 million. The third factor was the declining sales volume.
Last year the company's sales came in at LTL 82.4 million, a plunge of 32.9 percent from the year-earlier figure of LTL 122.8 million. The producer expected its full year sales to reach approximately LTL 82 million.
Respublika, Lietuvos Rytas, Lietuvos Zinios

Topo Centras retailer boosts sales 27 percent
Lithuania's household appliance and electronics retail group Topo Centras posted a 26.6 percent growth in sales revenue for 2005. The group's Latvian chain, Topo Centrs, boosted sales by 79 percent last year. Topo Centras opened 8 new stores, 5 in Lithuania and 3 in Latvia, last year, expanding its total retail area to 27,800 square meters and creating 150 new jobs.
This year it plans to open more than ten new stores in the two Baltic countries. The chain currently has 44 stores in Lithuania and Latvia and employs a workforce of about 700 people.

MEPs of EU newcomers express discontentment with Services Directive
MEPs representing seven EU member states have passed a joint declaration expressing discontentment with a version of the Services Directive adopted by the European Parliament, which, in their opinion, does not ensure conditions necessary for economic development and increase of competitiveness. It was signed by Laima Andrikiene of Lithuania, Jan Zahradil of the Czech Republic, Tunne Kelam of Estonia, Jozsef Szajer of Hungary, Valdis Dombrovski of Latvia, Jacek Saryusz-Wolski of Poland and Zita Plestinska of Slovakia.
In the MEPs' words, "it is unacceptable that the Directive leaves serious restrictions on the freedom of the posting of workers - a freedom without which no real competition can emerge in the services market."
Kauno Diena

Wednesday, 15th of February

Consumer prices climb 0.5 percent in Lithuania in January
Despite hopes of policy makers that the inflation would come in below the forecasts in January, the consumer price index (CPI) rose by 0.5 percent month-on-month, in line with earlier projections of the Statistics Department. As compared with January 2005, the inflation came in at 3.5 percent, while the average annual inflation was 2.8 percent.
Finance Minister Zigmantas Balcytis has recently claimed that the consumer prices should edge up by 0.2 percent over January, while the annual inflation should range within 3-3.2 percent. The January rise in consumer prices mostly resulted on the 3.2 percent increase in the prices of transport goods and services. The prices of foodstuffs and soft drinks gained 1.2 percent, while the prices of accommodation, utilities and other fuel rose 1.4 percent. Meanwhile, the prices of clothing and footwear plunged by 5.1 percent, other goods and services - 0.5 percent.

IMF sees no economic hardships for Lithuania to result on one-year delay of euro adoption
Rising inflation may ruin Lithuania's aspirations to adopt the single European currency in 2007, although the one-year delay in the introduction of euro would not result in any major economic hardships for the country, the visiting mission of the International Monetary Fund (IMF) has said. However, Lithuania's government could manifest its commitment to adopt the single currency through the application of tough fiscal policy during 2006, IMF experts noted adding that the inflation, which may prevent the country from the introduction of euro in 2007, might exceed the set criterion in subsequent years as well. The government should adopt a law on fiscal responsibility and reduce the amounts paid under the lost rouble deposits and real estate restitution schemes. Such measures would enable the authorities to reduce the fiscal deficit to 1 percent of GDP, from the scheduled 1.4 percent, IMF mission noted.
Moreover, the mission has advised the government to consider the replacement of monetary compensations for deposits and real estate with bonds.
Kauno Diena, Lietuvos Rytas, Lietuvos Zinios, Verslo Zinios

Net earnings of Sampo surge 7.7 times over 2005
Sampo, Lithuania's commercial group controlled by Finland's Sampo group, reported LTL 8.74 million in preliminary unaudited net earnings for 2005, a surge of 7.7 times over the year-earlier figure of LTL 1.134 million. Consolidated assets of the group stood at LTL 3.269 billion. Sampo bank alone earned LTL 8.2 million in unaudited net profit last year. The assets of the bank stood at LTL 3.08 billion as of late December, which made it fifth among Lithuania's commercial banks. Sampo raised its assets twofold over last year. The loan portfolio surged by 97.5 percent, year-on-year, to LTL 2.321 billion, including LTL 1.119 billion in retail loans. As of late 2005, the bank held 8.9 percent of overall loan market and 13.1 percent of retail loan market.
Lietuvos Rytas, Verslo Zinios

Tuesday, 14th of February

FlyMe to buy 100 percent of Lietuvos Avialinijos
Swedish airline FlyMe Europe has signed a deal to buy a stake in Lietuvos Avialinijos (Lithuanian Airlines, or LAL) and intends to increase its holding in the Lithuanian air carrier to 100 percent by late February 2009. Dow Jones reported that the Swedish airline' majority owner, Iceland's Fons Eignarhaldsfelag, has reached an agreement with LAL, under which the Lithuanian company will launch a directed share issue to FlyMe Europe. After the share issue, FlyMe Europe will hold 33 percent of the stock capital and votes in the Lithuanian air carrier. FlyMe Europe will have the right to appoint the chief executive officer, chairperson of the board and the majority of board members in LAL. It will be entitled to gradually increase its holding in the Lithuanian airline, to reach 100 percent by February 25, 2009.
Kauno Diena, Lietuvos Rytas, Lietuvos Zinios, Respublika, Verslo Zinios

KLASCO handles 3 percent more cargo
Klaipedos Juru Kroviniu Kompanija (Klaipeda Stevedoring Company, or Klasco), the largest operator in the Lithuanian port of Klaipeda, handled 720,000 tons of cargo in January, up three percent from 697,000 tons in the same period a year ago. Klasco, which is controlled by the Achema Group, said cargo handling increased even though it sold its container terminal last December. The company said it accounted for more than one-third of all cargo traffic at the port of Klaipeda last month. It loaded 524,000 tons of cargo onto ships and unloaded 196,000 tons from ships. The monthly volume of cargo at Klasco's Ro-Ro terminal rose by one-tenth to 220,000 tons. The flow of motor vehicles via the terminal surged by 35 percent to 1,670, while passenger numbers jumped by 25 percent to 10,000. The company reported a net profit of LTL 11.829 million for the first nine months of 2005, versus a loss of LTL 9.395 million in the same period in 2004.
Lietuvos Zinios

Norfa is to set up a pharmacy chain
Norfa, the owner of one of the biggest grocery chains in Lithuania, has established a new company, Norfos Vaistine (Norfa Pharmacy), as part of its plans to open pharmacies at its shopping centres. Norfos Vaistine was registered last Saturday. Dainius Dundulis, chairman of Norfos Mazmena, the operator of the grocery chain, said that the group had been developing the idea of setting up a pharmacy chain for a couple of years.
"A pharmacy will open in every Norfa store, where technically possible. This year we plan to establish at least 45 pharmacies, with a sales target of about LTL 30 million in total," Dundulis said.
The first Norfa pharmacy should open for business in April. The group has had no pharmacies of its own until now.
Lietuvos Rytas

Monday, 13th of February

Zvinys resigns as CEO of Lithuanian Airlines
Vidas Zvinys has resigned as chief executive officer of Lietuvos Avialinijos (Lithuanian Airlines, or LAL), the country's biggest air carrier. Zvinys confirmed on Saturday that he had stepped down from the position, which he had held for several years. Arunas Griskenas, director of LAL's Sales Department, has taken over as CEO of the airline. Griskenas joined the company following its privatization last August. Verslo Zinios, Respublika

Vilniaus Vingis forecasts bigger profit
Vilniaus Vingis, yoke system producer, projects to reach LTL 89 million turnover and earn LTL 1.1 million pre-tax profit in 2006. The company previously targeted to reach the sales of LTL 67 million. The company plans to invest some LTL 15.7 million this year. Last year, the sales of Vilniaus Vingis stood at LTL 82.4 million a decline of 32.9 percent since 2004 when the sales came in at LTL 122.8 million.
Verslo Zinios

Ultrapramogos boosted turnover
Turnover of nightclubs and pizzerias chain operator UAB Ultrapramogos grew by 2.5 times from LTL 6.5 million in 2004 to LTL 15 million in 2005. Last year the company opened two pizzerias Mambopizza in Vilnius and Klaipeda and launched a service of food delivering to home in Vilnius. Besides, it opened a brewery-restaurant Bavaria the investments into which amounted to LTL 3 million.
Verslo Zinios

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