Observer "Lietuva"

Lithuania Business News: Archive 2003-2006

WEEK 21.2006

Saturday, 27th of May

Lietuvos Dujos set to hike gas prices by 10-15 percent
Lietuvos Dujos, the natural gas utility, has submitted new prices of natural gas to be applied for regulated customers from July 1, to the State Control Commission for Prices and Energy for approval. If confirmed, the prices will rise by approximately 10-15 percent.
Lietuvos Dujos seeks to boost the price of natural gas paid by the customers consuming up to 90 cubic meters per year to LTL 1.46, from LTL 1.24 per cubic meter.
The fixed price component for the customers consuming from 90 to 800 cubic meters per year should rise to LTL 2.35, from LTL 2 per month, and the variable component - to LTL 1, from LTL 0.9 per cubic meter.
The fixed monthly price component paid by the customers consuming from 800 to 20,000 cubic meters per year, would remain unchanged at LTL 12.
Lietuvos Zinios, Kauno Diena, Respublika

The financially troubled air carrier Air Lithuania plans to auction its only plane, a 46-seat ATR-42-300. The starting price for the plane, manufactured in France in 1986, is LTL 5.2 million. The company said it would also offer four cars, manufactured in 1994 to 2001, office furniture and equipment for sale at the auctions scheduled to be held in Kaunas Airport on June 7 and 12. The Civil Aviation Administration revoked the company's license to operate air services in February this year. The air carrier has cancelled all scheduled flights as of November 23, 2005. In March, Air Lithuania had debts of about LTL 23 million.
Lietuvos Rytas

Mazeikiai Oil forgoes dividends for 2005
Mazeikiu Nafta, the sole Baltic oil refining and transportation complex in the process to be sold to Poland's PKN Orlen, has ruled to forgo dividends for last year despite posting the net profit of LTL 885.714 million for that year. The shareholders of the company ruled to transfer LTL 13.828 million to the mandatory reserve. Moreover, the shareholders agreed to move some LTL 962.76 million in profit to the subsequent financial year.

Friday, 26th of May

Philip Morris Lithuania to channel over LTL 20 million into expansion of its Klaipeda plant
Tobacco producer Philip Morris Lietuva aims to plough over LTL 20 million into the expansion of its Klaipeda-based plant. The manufacturing area of the plant will grow by over 3,000 square meters. Moreover, the expansion project will involve the reconstruction of engineering networks installed within the territory of the plant. The project should be wrapped up by the end of 2006. With this project wrapped up, the total investments of Philip Morris in Lithuania will exceed LTL 380 million. Philip Morris Lietuva established back in 1997 was the first green field investment in Lithuania.
Verslo Zinios

First Baltic furniture store ChristianHarold opens in Vilnius
The ChristianHarold store of top-of-the-range furniture, the first in the Baltic countries, opens in Vilnius. The store will offer the furniture, which 40 Lithuania's furniture makers contracted by Link Interiors Baltic since 2001 earlier produced solely for exports.
"We will offer Lithuania-made products, and the prices of furniture will be lower than abroad," Audrius Cibulskas, Link Interiors Baltic CEO, said.
The design of dining room, living room and bedroom furniture from natural timber is produced by designers from UK, Denmark and Luxembourg.
Lietuvos Rytas

Real estate tax rates in Lithuania to range from 0.3 to 1 percent
Real estate tax rates for companies in Lithuania will range from 0.3 percent to one percent of the taxable value of real property as of next year. Each municipality will be able to set its own tax rate within this range and to reduce the rate for companies based on certain criteria established by the government. This is provided for in amendments to the Law on Real Estate Tax that passed the parliament on Thursday by a vote of 89 in favour and one abstention.
Currently, real property used for commercial purposes is taxed at a rate of one percent of its market value. The tax had been much lower before the start of this year. Municipalities will have to set their tax rates by June 1 every year. If the council of a municipality misses this deadline, the existing tax rate will remain in place in that municipality.

Thursday, 25th of May

Construction employs most illegal workers
The construction sector employs most illegal workers in Lithuania, accounting for 40 percent of all cases of illegal labour that were discovered last year, the State Labour Inspectorate (SLI) reported. The agricultural sector accounted for over eight percent, wholesale and retail trade for almost eight percent, forestry and furniture industry for more than seven percent, and the car servicing industry for 6.5 percent. The SLI performed almost 5,000 inspections last year and found 1,500 people working illegally.
Lietuvos Rytas, Respublika, Verslo Zinios

Net profit of Lisco Baltic Service trebles
The consolidated net profit of Lisco Baltic Service, the sole Lithuania's ferry operator controlled by Denmark's DFDS, surged threefold, year-on-year, to LTL 7.091 million in the first quarter of 2006 on the back of one-off income on the sale of Klaipeda-Karlshamn ferry line to DFDS and a ship. The LBS group is projecting its full year profit to reach LTL 23-25 million.
Lietuvos Rytas

Sparta improves results
Vilnius-based sock and knitting company Sparta reported income of LTL 15.928 million for 2005, a rise of 7 percent since 2004 when it came in at LTL 14.88 million. In 2005, Sparta posted LTL 90.34 thousand net profit, whereas last year it incurred LTL 0.473 million. The company’s turnover in Irish market grew 24.8 percent last year. Ireland is the biggest export market of Sparta. Irish company Ridgeview moved sock production to Sparta and boosted orders up to 2 million pairs of socks per year. Lietuvos Rytas, Verslo Zinios

Wednesday, 24th of May

Yukos to sell Lithuanian refinery stake to Poland's PKN Orlen
Crippled Russian oil company Yukos is set to sell its 53.7 percent stake in the Lithuanian crude refinery Mazeikiu Nafta to the Polish oil company PKN Orlen, Prime Minister Algirdas Brazauskas said on Tuesday. Brazauskas said that Yukos and PKN Orlen had already prepared an agreement on the sale of the shares.
A US bankruptcy court in New York has blocked the sale of Yukos' majority stake in Mazeikiu Nafta at the request of a Moscow court-appointed temporary administrator of the Russian company.
Brazauskas said that PKN Orlen's representatives could be present at the New York court's hearing on Thursday, when the court is expected to decide whether to allow Yukos to sell its stake in the Lithuanian refinery.
The premier also said that the Lithuanian government would not object to the Polish company buying the shares in Mazeikiu Nafta directly from Yukos. Brazauskas said that the Lithuanian government, which now owns a 40.6 percent stake in Mazeikiu Nafta, wanted to sell 30 percent of the shares to the Polish company.
Lietuvos Zinios, Lietuvos Rytas, Respublika, Kauno Diena, Verslo Zinios

Lithuania's industrial sales rise 11.8 percent
Lithuanian industrial sales grew by 11.8 percent in the first four months of this year compared with the year-earlier figure. In April alone, the output and sales rose by 9.8 percent, year-on-year. Compared with March, the sales declined by 12.9 percent. In January-April, sales in the mining and quarrying sector and the manufacturing sector went up by 12.6 percent year-on-year. Excluding refined petroleum products, the rise was 15 percent. In April versus April 2005, the sales rose by 9.4 percent and 9.1 percent, respectively.
Lietuvos Zinios

Estonia's Ordi teams up with Lithuania's Aideta to supply single brand PC to Baltic market
Ordi, the leading Estonia's hardware vendor that is also active in Latvia, has joined forces with Lithuania's Aideta to market the Ordi branded personal computers in all three Baltic countries. Until now, Aideta, which is majority owned by Ordi, traded in desktop PCs and laptops with the brand name of Spector.
A single brand of products would guarantee identical manufacturing standards, after sale service and high quality. This year the companies expect to build and sell 35,000 Ordi PCs, which are expected to emerge as most popular in the Baltic countries in the upcoming five-year period.
Ordi acquitted the majority holding in Aideta in March last year. The combined turnover of two companies exceeded LTL 100 million in 2005 and is expected to reach LTL 122 million this year.
Lietuvos Rytas

Tuesday, 23rd of May

Sanitas group raises profit 4.5 percent
Sanitas, the group led by the largest Lithuania's pharmaceutical company controlled by domestic and foreign investors, posted LTL 1.142 million in net profit for the first four months of 2006, a rise of 4.5 percent versus the year-earlier figure. In April alone, the net profit plunged by 53.9 percent, year-on-year, to LTL 238,400.
The earnings before interest, tax, deterioration and amortization (EBITDA) of the group surged by 88.6 percent, to LTL 5.545 million in the January-to-April period. In April, however, the operating profit as measured by EBITDA shrank by 5.9 percent, to LTL 952,000.
Lietuvos Zinios, Lietuvos Rytas

Realtus to invest EUR 8.5 million into dwelling project in Kaliningrad
Realtus, a real property development firm owned by Panevezio Keliai, the largest Lithuania's construction and real estate group, aims to invest some LTL 29.3 million into a 8-storey dwelling house, which it would build with partners at Russia's exclave of Kaliningrad. The project will be the first for Realtus to be implemented in a foreign market.
The company ruled to channel some investments into foreign markets since the drawing of detailed plans in Lithuania had been suspended pending the approval of new general plans for Lithuanian cities, Jonas Radeckas, Realtus CEO, said.
The dwelling house with the area of 11,000 m2 will be build at a 67-ares land lot in the centre of Kaliningrad.
Verslo Zinios

Airports will be upgraded
YIT Kausta, the Kaunas-based real estate developer and builder controlled by Finland's YIT Construction, is set to build a new LTL 96.732 million worth passenger terminal at Vilnius Airport, which is required for the airport to meet the Schengen criteria. The new 3-storey passenger terminal will cover the area in excess of 14,000 m2. Earlier the Vilnius Airport obtained some LTL 20 million in support from Schengen Fund. The construction of the terminal will also be financed with LTL 80 million in the airport's own funds, with the additional funding to be raised from commercial banks.
A consortium of Siemens and Lemminkainen Lietuva will complete the project on the upgrade of Palanga Airport after winning the respective tender. The consortium of German-equity Siemens and Finland-equity Lemminkainen Lietuva was the sole bidder, he added. The tender dossiers were acquired by 12 companies. The upgrade project will include the widening of runway by 5 meters and its lengthening by 300 meters, to 2.3 kilometres.
Lietuvos Rytas, Verslo Zinios

Monday, 22nd of May

Profit of Vilniaus Baldai slumps
Vilniaus Baldai, one of Lithuania's leading furniture manufacturers, reported a pretax profit of LTL 72,000 for the first four months of this year, down from LTL 787,000 a year earlier. The financial result for April was a loss of LTL 690,000, compared with a pretax profit of LTL 349,000 in the same period last year.
The company attributed the loss to a change in orders from its main buyer, Sweden's Ikea. "We are now starting to manufacture new products for Ikea. There should be no losses in May," Vilniaus Baldai CFO Vygantas Didziulis said.
The company's annual sales rose by 10.3 percent to LTL 110.849 million last year, but profit dropped to LTL 3.47 million, from LTL 8.234 million in the previous year. The Vilnius-based furniture manufacturer targets a 26 percent growth in full-year sales to LTL 140 million this year.
Lietuvos Zinios

Net earnings of Snoras up 9 percent in the first quarter
Snoras, a Lithuanian bank that is controlled by Russia's Konversbank, posted a net profit of LTL 14.5 million for the first four months of 2006, a rise of 9.1 percent versus the year-earlier figure of LTL 13.289 million. The bank sees its net profit for full 2006 rising by 10 percent, to LTL 45 million, from LTL 40.669 million in 2005. Last year the bank raised its profit threefold, from LTL 13.345 million in 2004.
The bank's assets surged by 71.3 percent over the year, to reach LTL 3.298 billion. The loan portfolio expanded by 69.1 percent, to LTL 1.079 billion, deposits - by 71.9 percent, to LTL 2.487 billion.
Lietuvos Zinios

Experts say TEO LT shares undervalued
Analysts of finance broker company Zabolis Ir Partneriai claim in their report that the shares of TEO LT in Vilnius Stock Exchange are undervalued and should cost LTL 3.69. The real share value of the telecommunications company should be 60 percent higher. In the words of Justinas Saltys, CEO of Zabolis Ir Partneriai, stable income and the number of clients as well as modernised network predetermine positive evaluation of TEO LT. Besides, the company’s concentration on the core activities and preparation for development of internet and television services are also estimated as favourable factors.
The analysts highlight that possible threats to TEO LT are the growing competition of mobile operators and internet voice transmission programs as well as the decision of the Communications Regulatory Authority to influence the market and the 3G mobile communications market.
Lietuvos Zinios, Verslo Zinios

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