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Lithuania Business News: Archive 2003-2006

WEEK 48.2006

Saturday, 2nd of December

VP Market divests stake in match maker Liepsna
VP Market, the operator of the largest retail chain in the Baltics, sold this week its 12.11 percent stake in the Lithuanian manufacturer of safety matches Liepsna, which ceased match production in June. The regulatory authority did not say who had bought the shares.
The Kaunas-based factory ceased match production in June due to rising prices for raw materials and energy. In September, the company said it was considering offers from two foreign partners to resume match production in a foreign country. Liepsna also manufactures disposable tableware and plastic foam trays.
The match manufacturer posted a loss of LTL 68,240 last year, compared with a net profit of LTL 130,000 the previous year, as revenue dropped by 18.1 percent to LTL 4.83 million. The company has an authorized share capital of LTL 1.608 million.
Lietuvos Zinios

Hermis Capital posts loss of LTL 11 million
Lithuanian investment company Hermis Capital, which holds stakes in a number of local and foreign firms, suffered losses of LTL 11 million in 2005 after a highly profitable year 2004. Hermis Capital's operating losses halved to LTL 1.45 million last year, but financial and investment activities brought LTL 52.029 million in losses, compared with profits of LTL 91.12 million for 2004.
Last year, Hermis Capital had two subsidiary companies, Hermis Fondu Valdymas and Survesta. It also had holdings in Baltijos Vertybiniai Popieriai, Snaige, HC ir R-IV Projektai, NV Investicijos, Latvia's Maza Nometnu, Norway's Kitron, Russian Oil Ventures and other companies.
Lietuvos Zinios

Lithuania's employees change jobs once in 6.5 years
Employees in Lithuania change jobs once in 6.5 years on average, the latest study by the European Foundation for the Improvement of Living and Working Conditions has shown. In Estonia, employees change jobs once in seven years on average, while in Latvia residents change jobs once in 6.3 years on average, which is the third highest labour mobility figure in the European Union.
Lietuvos Rytas

Friday, 1st of December

County accounts for 36 percent of Lithuania's GDP
Vilnius County contributed 35.8 percent of Lithuania's total GDP last year. Kaunas County generated 19.4 percent and Klaipeda County accounted for 11.7 percent, while economic growth of other counties was slower. The economic performance of Vilnius county is highly dependant on the services sector, which accounts for as much as 70 percent of the total value-added generated by the county, compared with the national average of 60 percent.
The per capita GDP level in Vilnius County was 144 percent of the national average, and that of Klaipeda County was 105.1 percent of the national level. The results showed that differences between Vilnius and other regions did not narrow in 2005. The per capita GDP in Vilnius County remained twice as high, or even higher, as in Alytus, Marijampole and Taurage.
Lietuvos Rytas, Respublika, Verslo Zinios, Lietuvos Zinios

Mikotel buys Hotel Panorama in Vilnius
Lithuania's Mikotel has purchased a 100 percent stake in the Hotel Panorama in Vilnius, from Cyprus' Mekarias Investment in a deal worth LTL 33.63 million. Mikotel, which currently owns two hotels in Vilnius, took the decision to buy the Hotel Panorama, formerly Gintaras, last year. However, the deal was finalized on November 28. Under an earlier signed purchase agreement, Mikotel acquired the right to operate the hotel, which is located near the capital's coach and train stations, from the start of this year.
Mikotel Director Kristina Motiejunaite said that the hotel would soon reopen after a major renovation.
"In the future, we have plans to expand into other Lithuanian cities and towns. We intend to focus on the economic-class hotel segment, because we believe that it has the greatest growth potential," she added.
Mikotel, which is owned by Rimantas Miknius and his family, owns the Mikotel and Comfort Vilnius hotels.
Lietuvos Rytas

Rautakirja suspected of breaching obligations imposed by Lithuania's competition watchdog
Finland's Rautakirja, which purchased the Vilnius agency of Lietuvos Spauda, the operator of the leading kiosk chain in the country, last year, might have breached the reservations and obligations imposed by Lithuania's Competition Council as per this transaction. The council has ruled to launch an investigation into the actions undertaken by Rautakirja after considering a respective request of Medipresa, the local press distributor.
Last October Finland's Rautakirja was allowed to acquire 100 percent of the Vilnius agency of Lietuvos Spauda on condition that the periodical distribution and marketing activities were pursued by two independent companies.
Companies within the group of Vilnius agency of Lietuvos Spauda were take up the retail trade in kiosks, while the periodicals distribution activities was to be transferred to Impress Teva, a press distributor under Rautakirja's control, in six months' time.
Moreover, Rautakirja was obliged to apply a system of commissions that would be non-discriminatory, transparent and equal for all publishers.
Verslo Zinios

Thursday, 30th of November

Construction prices in Lithuania edge up 0.3 percent over October
Construction prices in Lithuania edged up by 0.3 percent over October and surged by 9.4 percent from October 2005. Month-on-month, the prices of construction materials and products, as well as wages and overhead costs were up 0.3 percent, which had the biggest impact on the construction price index in October. The per-hour cost of construction equipment operation grew by 0.2 percent last month.
Residential construction prices rose by 0.3 percent, non-residential construction by 0.4 percent, and engineering structures by 0.1 percent in October versus September. Year-on-year, the growth rates were 10 percent, 8.2 percent and 10.2 percent, respectively.
Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios

DnB Nord Bank invests in IT system upgrades
DnB Nord Bankas, Lithuania's third-biggest bank by assets, has installed a new data backup centre and upgraded its information systems infrastructure. The bank said the total value of the implemented projects was LTL 5 million.
"By investing into the latest technologies and IT systems development, we invest into service variety, quality and data security," DNB Nord Bankas President Werner Schilli said in a statement.
The new data backup centre complies with international standards and ensures uninterrupted operations if one of the banking systems goes down by immediately transferring its functions to a backup system. The bank's partners in the project were Baltic Data Center, Hewlett Packard, Santa Monica Networks and Omnitel. Respublika

Lelija closes down shops in Ukraine
Lelija, Lithuania's producer of outwear textile clothing, has opted to close down any retail business in Ukraine and pursue only wholesale activities in that country. The company closed down its Ukrainian stores with its earlier plans to open four outlets in that country unfulfilled.
As reported previously, the attempts of Lelija to open new stores in Russia fell through last year.
The company achieved a turnover of LTL 50.8 million in the first nine months of 2006, a rise of 3.5 percent versus the year-earlier figure of LTL 49.1 million. The clothes maker sees its full-year revenues growing to LTL 69 million this year, from LTL 68.4 million in 2005.
Verslo Zinios

Wednesday, 29th of November

PKN Orlen sees closing purchase of Mazeikiu Nafta on December 15
PKN Orlen, the Polish oil concern, aims to sign an agreement with a group of banks over the financing of its purchase of Mazeikiu Nafta in several days and complete the purchase of the sole Baltic oil refining and transportation complex on December 15.
"I may say that we intend to sign an agreement with banks in several days to come. We will disclose all terms of financing after the signing," PKN Orlen spokesman Dawid Piekarz said.
Claire Davidson, Yukos International spokeswoman, said that the deal over the 53.7 percent stake of Mazeikiu Nafta controlled by Yukos International UK would be completed as soon as all parties to the transaction finalized the required actions.
"We do not project the date. However, we know that PKN Orlen has expressed its willingness to close this deal as soon as possible," Davidson said.
Nerijus Eidukevicius, Mazeikiu Nafta's chairman and one of key government's negotiators in talks over the sale of the oil complex, said that the government was also ready to finalize the deal as it had almost completed all its actions prescribed in agreements.
He admitted that PKN Orlen would first close the deal with Yukos International UK with the transaction with Lithuania's government to follow. However, both deals might be finalized on the same day.
Lietuvos Zinios, Kauno Diena

Natural gas prices for regulated customers set to rise by one-fifth
The prices of natural gas levied by Lietuvos Dujos, the natural gas utility, on its regulated customers will rise by 19 percent on average from Jan. and will be in effect till July 1.
The rise for households consuming low volumes of gas would be insignificant. For example, the prices for households consuming up to 90 cubic meters per year, would rise by 9 percent, to LTL 1.6 per 1 cubic meter, from LTL 1.46, while the prices for those consuming 90-800 cubic meters would grow by 13 percent, to LTL 1.13, from LTL 1 per cubic meter. The prices for households consuming 800-20,000 cubic meters per year and using natural gas for heating would rise by 17 percent, to LTL 0.89, from LTL 0.76 per cubic meter. The rise for larger customers would be some 18-20 percent.
Early in October, Alexander Ryazanov, then Gazprom deputy chairman, said on his visit to Vilnius that the price of natural gas for Lithuania would rise to some USD 195 from 2007.
Lietuvos Zinios, Lietuvos Rytas, Respublika

Accommodation industry posts 14 percent rise in guest numbers
A total of 1.2 million people stayed at Lithuanian hotels, guesthouses and other accommodation establishments during the first nine months of this year, a rise of 13.6 percent year-on-year. The number of guests in hotels and guesthouses grew 18.5 percent in the period of January-to-September. The number of guests in convalescence institutions increased by 1.4 percent.
The largest numbers of foreign guests at Lithuanian hotels and guesthouses came from Germany, Poland, Latvia and Estonia, the United Kingdom and Russia.
Verslo Zinios

Tuesday, 28th of November

Average salary in Lithuania up 20 percent
Average monthly gross earnings in Lithuania (excluding sole proprietorships) rose by 19.9 percent in the third quarter of this year from a year earlier to reach LTL 1,653.5. Year-on-year, gross earnings in the public sector increased by 21.4 percent, to LTL 1,729.9, while earnings in the private sector expanded by 19.2 percent, to LTL 1,605.9.
Real wages in the entire economy (excluding sole proprietorships) grew by 21.4 percent from a year earlier. The growth rates were 22.9 percent in the public sector and 20.6 percent in the private sector.
Compared with the second quarter, the rise in real wages was 14.7 percent, 15.2 percent and 14.5 percent for the entire economy, public sector and private sector, respectively.
Kauno Diena, Lietuvos Zinios, Verslo Zinios

Alternative stock market in Lithuania targets funds, private investors
An alternative stock market for small and medium companies with growth potential, which is being established by the Vilnius Stock Exchange (VSE), is expected to attract interest from risk capital funds and small private investors.
"We have been implementing the alternative market project since the start of this year. It should be launched next year, when the appropriate legislation comes into force," Saulius Malinauskas, director of the VSE Market Operations Department, said on Monday.
The alternative stock market will serve as a marketplace for shares of companies that do not meet the requirements for being listed on the VSE. Therefore, investments in that market would be riskier. The VSE itself will regulate trading on the alternative market.
Lietuvos Zinios, Lietuvos Rytas

Lithuania's government shall reimburse Svenska's damages
London Court of Appeals earlier this month upheld the decision adopted by the Copenhagen arbitration tribunal three years ago, which obliged the Lithuanian government to pay LTL 33.5 million in damages to Sweden's Svenska over the violation of its rights to operate certain oil fields in the western part of Lithuania.
In November 2005 the London court met a claim of Svenska Petroleum Exploration over the upholding of decision of the international arbitration court. However, the ruling was only in effect with respect to Geonafta, the Lithuanian oil production company, which had no assets in UK.
The enforcement of the latest decision of the London Court of Appeals with respect to Lithuania's government would depend on whether the government had any assets in UK, except for the assets of diplomatic services, said Kestutis Svirinas, a partner with Baublys & Partners, who represent the Lithuanian oil company Geonafta.
Lietuvos Zinios

Monday, 27th of November

Foreign chains eyeing on Lithuania
Over 40 world retail trade chains have plans to open several or several tens of stores in Lithuania in the nearest future. Lithuanian real estate project developer Ogmios Centras has noticed such tendencies in the international real estate exhibition Mapic. The attitude of foreign trade chains towards Lithuania and Baltic countries’ market has changed recently. Instead of 1-2 pilot stores they intend to open 5-10 stores at a time in the Baltics.
Verslo Zinios

Prices of agricultural products rise
Agricultural product purchase prices grew 23.8 percent over a year from October 2005 to the same period this year. Onion prices increased most of all in the respective period – by 91.7 percent. Meanwhile potatoes prices soared by 81.2 percent, oat – 68.8 percent, rye – 64.9 percent, wheat – 56.5 percent and beetroots – 33.1 percent. Respublika

Power bridge to be opened
Pilot works of a joint Baltic project Estlink underwater cable started last week. On November 23, power was supplied to Finland via the cable for the first time. Opening of the power bridge is planned on December 4. Estlink line will be the first intersystem power link between Baltic and Nordic countries markets and will ensure stability of power systems and supply of electricity.
Respublika

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