Observer "Lietuva"

WEEK 12.2006

Saturday, 25th of March

Minister did not sign hippodrome project
Plans of the Australian investors to build a horse sports centre worth LTL 700 million in Lithuania are regarded sceptically. It is suspected that the hippodrome project prepared by the joint Lithuanian-Australian company Baltijos Hipodromai (Baltic Hippodromes) might be non-transparent. The company seeks to provide the project with a state importance status, which would enable the company to rent 454 hectares of state land without a tender.
Lithuania’s minister of agriculture Kazimiera Prunskiene decided not to sign the project. She said that afterwards the Special Investigation Service confirmed that the project had signs of corruption.
Lietuvos Rytas, Kauno Diena

Lithuania will join euro zone when it will meet al the criteria of EU agreement
EU Economy and Monetary Affairs commissioner Joaquin Almunia reiterated that a single criterion that causes problem to Lithuania seeking to join the euro zone is inflation.
Lithuania’s possibilities to introduce euro starting 2007 were discussed in the meeting of the Lithuanian Prime Minister Algirdas Brazauskas, Lithuanian finance minister Zigmantas Balcytis and the EU commissioner Joaquin Almunia.
In February, the average annual inflation in Lithuania amounted to 2.7 percent, while the forming Maastricht criterion was 2.63 percent. Mr. Almunia stressed that the country’s evaluation will be technical, not political and Lithuania will be admitted to the euro zone only then when it will meet all the criteria of the EU agreement.
Lietuvos Rytas, Respublika

EU acknowledges isolation of Lithuania’s energy sector
European Union leaders have for the first time acknowledged the main problem of the Lithuanian energy sector - isolation from EU energy networks.
The European Council approved on Friday the conclusions presented by Austria, president of the EU. The council welcomed the proposals laid down in the document issued by the European Commission on March 8 regarding integrated EU energy policy.
"The consistent and firm stance taken by Lithuania decided that priority attention of the EU energy policy would be focused on isolated energy markets like those of the Baltic states. Stipulated measures will allow ensuring better energy security for Lithuania," said Lithuanian Prime Minister Algirdas Brazauskas.
The EU leaders urged the European Commission to draft a plan of priority links by the end of this year on integration of isolated markets and building of electricity lines to the European Union market.
Respublika, Lietuvos Rytas, Lietuvos Zinios, Kauno Diena

Friday, 24th of March

PKN will compete for Mazeikiu Nafta
The biggest Polish fuel company PKN Orlen will submit an offer to purchase the Lithuanian oil refinery Mazeikiu Nafta (Mazeikiai Oil or MN) to Lithuania, the Polish news agency PAP reports.
Dawid Piekarz, a spokesperson of PKN Orlen, says the Government of Lithuania has announced that it will seek to sell its shares and the company is interested in possibilities to participate in the process.
According to PAP, on March 22 the Russian company YUKOS agreed to sell 53.7 percent of MN shares to Lithuania, which is to pay up to LTL 3 billion for the shares.
Kazakhstan state company KazMunaiGaz has offered USD 1.2 billion for the shares of MN controlled by YUKOS.
Verslo Zinios

VAT reduction for food products
Traders claim that the proposal of the authorities to reduce the value added tariff for food products would precondition smaller prices in stores however some politicians believe that the concession will benefit trade centres rather than consumers.
According to the figures of the Statistics Department, food product prices increased 4.2 percent over the last year. If the proposal of the Ministry of Agriculture to reduce VAT for food products down to 5 percent was accepted, traders believe that the food product prices would stop growing, furthermore, they would reduce. This project is supported by big and small traders.
Lietuvos Zinios

Change of bank’s name
Shareholders of the third biggest commercial bank in Lithuania Nord/LB Lietuva decided to change the bank’s name to DnB Nord Bankas, to raise the number of council members from 6 to 7 and to reduce the number of board members from 7 to 6.
Last year the bank netted LTL 43.04 million profit; it plans to use the profit for raising the stock capital by LTL 49.29 million, to LTL 283.396 million.
Shareholders have shared LTL 59.92 million profit.
Lietuvos Zinios

Thursday, 23rd of March

Minimum salary in Lithuania to rise to LTL 600 from July
The Lithuanian government decided on Wednesday to raise the minimum monthly salary by LTL 50 to LTL 600 from July 1 this year. Some LTL 31 million has been earmarked in this year's budget for this purpose. Prime Minister Algirdas Brazauskas noted that a cut in the personal income tax rate from the current 33 percent to 27 percent would become effective on the same day. He said that the government would look to further reduce the personal income tax rate in order to keep the economy competitive and encourage investment.
The minimum monthly salary was last raised from LTL 500 to LTL 550 last July. The government's program calls for increasing the minimum salary to LTL 800 in 2008. Lietuvos Rytas, Kauno Diena, Respublika, Verslo Zinios

Klaipedos Nafta intends to pay LTL 0.02 dividend
Klaipedos Nafta, the state-run oil product terminal operator, intends to distribute LTL 8.081 million in dividends, or LTL 2.36 per share. Vladas Gagilas, Klaipedos Nafta's chairman and a department director at the Economy Ministry, said that the management board would submit the dividend proposal to the supervisory board for approval. The latter should discuss it in the first week of April. In line with the government's resolution, the total proposed dividend amount accounts for 40 percent of the company's distributable profits, LTL 20.203 million.
Klaipedos Nafta's full-year pretax profit dropped to LTL 10.866 million in 2005, down from LTL 24.738 million in the previous year. The terminal operator posted a net profit of LTL 18.302 million for 2004.
Lietuvos Zinios

Cargo flow grows 8 percent in Lithuania over 2005
The volume of goods moved by various types of transport rose by 8 percent, to 110.5 million tons in Lithuania in 2005, from 102.4 million tons in 2004. Cargo deliveries by road transport comprised 50.1 percent of total freight volumes. Rail transport accounted for 44.6 percent, sea transport - 4.7 percent, internal water transport - 0.6 percent, and air transport - 0.01 percent of total deliveries.
Respublika, Verslo Zinios

Wednesday, 22nd of March

MAZ Baltija drops plans to make buses in Lithuania
The MAZ Baltija car assembly centre in Vilnius has dropped its plans to manufacture small-size buses.
"We have completely abandoned plans to manufacture buses in Lithuania. There were several reasons for that," Nerijus Fomicius, a manager at Ziemgalos Automobiliai, which owns the assembly line, said.
He said the company had problems in certifying the MAZ 256 in Western Europe, while in Lithuania, it had received no orders for the new buses.
MAZ Baltija announced that it was launching the production of MAZ 256 buses, complying with the Euro 3 standard and having a seating capacity of 28 passengers, in February 2005. However, it produced only one bus for trial purposes.
Lietuvos Rytas

Social insurance fund runs LTL 79 million deficit
The Lithuanian State Social Insurance Fund (Sodra) reported LTL 79 million budget deficit for the first two months of 2006. In February, however, the fund ran a surplus of LTL 11 million. The revenues of the fund, including the assignations, amounted to LTL 1.009 billion in the first two months of 2006, 18.3 percent or LTL 156.3 million above the last-year figure. The expenditures, at almost LTL 1.088 billion, exceeded the respective last year amount by 16.2 percent or LTL 151.3 million, the Social Security and Labour Ministry has reported citing preliminary estimations.
Lietuvos Rytas, Respublika

Lithuania's businesses raise pretax earnings by 34 percent
Lithuania's companies posted LTL 7.331 billion in aggregate pretax earnings for full 2005, a surge of 34.2 percent from the year-earlier figure of LTL 5.461 billion. Full-year revenues rose by 21.6 percent, to LTL 122.2 billion, from LTL 100.5 million in 2004.
In the fourth quarter alone, the aggregate pretax profit of public and private companies, state-run and municipal companies, and cooperative societies made up LTL 1.842 billion, a decline of 17 percent versus the quarter-earlier figure.
Traders covered 42 percent of total revenues in the October-to-December period, with the manufacturing sector comprising 29 percent of the total. The construction, energy and business services sectors raked in 8 percent, 5 percent and 4 percent of the total revenue figure, respectively.
Business service companies, however, raised the quarterly profit by almost 23 percent, and traders - by 7 percent.
Lietuvos Rytas, Lietuvos Zinios

Tuesday, 21st of March

Estonia's A.Le Coq raises stake in Lithuania's Ragutis to 94 percent
Estonian brewery A.Le Coq has bought an 11 percent stake in Ragutis for an undisclosed sum of money, raising its stake in the Lithuanian brewery to 94 percent from 83 percent. The Estonian company has purchased the shares from two investment funds and a Lithuanian private individual. Last October, Ragutis' shareholders decided to increase the authorized share capital through additional contributions to LTL 39.253 million from LTL 6.452 million. A new share issue should be registered with the country's Securities Commission next week.
Lietuvos Rytas

Ekranas plunges LTL 110.3 million in red
Ekranas, Lithuania's struggling manufacturer of colour picture tubes (CPT), reported LTL 110.3 million in audited losses for 2005, down from the audited net earnings of LTL 1.29 million a year earlier. Amortization of long-term assets added LTL 20.2 million to the loss figure. Ekranas reported LTL 60.7 million in losses for the first three quarters of 2005. In the October-to-December period, the losses hit LTL 49.6 million.
Audited sales came in at LTL 339.6 million last year, a decline of 27.3 percent versus the year-earlier figure of LTL 467.1 million. Unaudited revenues made up LTL 341.5 million in 2005.
However, in the fourth quarter of 2005 the European electronics market showed some signs of revival, which were expected to strengthen up over 2006, the CPT producer said.
Lietuvos Rytas, Lietuvos Zinios, Kauno Diena

Alita strikes cooperation deal with Greis Logistika
Alita, the leading Lithuania's spirits producer eager to boost export volumes, has concluded a cooperation agreement with Latvia's wholesaler Greis Logistika.
"Successful cooperation with the retail chain of VP Market has made a significant contribution to our growth in Latvia. Our agreement with Greis Logistika should support further expansion," Darius Vezelis, Alita marketing and sales executive, said in a statement.
Moreover, Alita seeks to boost exports to neighbouring Poland.
Last year the company's exports surged by 7.5 times, year-on-year, to LTL 9.5 million. Other export destinations of the company include UK, Ireland, Finland, Spain, UAE, Estonia and Germany.
Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios

Monday, 20th of March

Pieno Zvaigzdes nets LTL 15.5 million in 2005, offers dividends
Pieno Zvaigzdes, the leading Lithuania's dairy group, has offered to pay out LTL 9.486 million, or 17.5 cents per share, in dividends after posting the unaudited net earnings of LTL 15.5 million for 2005. The company's net earnings declined by 18.8 percent last year, from the year-earlier audited consolidated net profit of LTL 19.1 million. Earlier the company projected its 2005 earnings to reach LTL 18.8-23.5 million. Dividends for 2004 made up LTL 8.115 million, or LTL 0.15 per share.
The company has said that its sales came in at LTL 446.4 million last year, a rise of 12.3 percent from the year-earlier figure of LTL 397.5 million. Earnings before interest, taxes, EBITDA edged up to LTL 49.3 million, from LTL 49.1 million in 2004. For 2006 the company is projecting some 12 percent rise, to LTL 500 million, in sales.
Lietuvos Zinios, Verslo Zinios

Utenos Trikotazas posts earnings of LTL 7.7 million
Utenos Trikotazas, the largest Lithuania's textile group controlled by multi-business group SBA, reported LTL 7.675 million in net earnings on sales of LTL 173.327 million for full 2005. The net earnings of Utenos Trikotazas, the knitwear producer, alone made up LTL 11.387 million, while the sales came in at LTL 121.423 million. The company is to boost sales by 18.45 percent to LTL 144.4 million and receive LTL 11.2 million profit for 2006.
Lietuvos Zinios, Verslo Zinios

Brussels assigns EUR 378,910 to offset Lithuania's losses from hurricane Ervin
The European Commission (EC) has assigned EUR 378,910 to offset Lithuania's losses from hurricane Ervin, which swept through the country in January 2005. The agreement on reimbursement of damages was signed by Danuta Huebner, the Commissioner for Regional Policy, and Lithuania's Environment Minister Arunas Kundrotas.
The hurricane swept through Sweden and three Baltic countries on January 8-9, 2005. In the Commission's opinion, total Lithuania's damages reach almost LTL 52 million.
Lietuvos Zinios

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