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Lithuania Business News: Archive 2003-2006

WEEK 49.2006

Saturday, 9th of December

Hardships at Polish subsidiary expected to drive Lithuania's Sanitas into red in 2006
The scandal over faulty medicine Corhydron produced by Jelfa, the Polish subsidiary of Lithuania's pharmaceutical group Sanitas, will not go away - the Polish company is estimating losses due to reach several millions of zlotys and is still negotiating with pharmaceutical inspectors over the resumption of production of its anti-allergy and anti-asthma medicine, which accounts for 8-9 percent of revenues on the Polish market.
"We are currently estimating lost revenues. The story with the suspension of manufacturing at Jelfa has not yet ended, and the losses are difficult to estimate. We are still expecting a permission to resume the production of Corhydron," Saulius Jurgelenas, Sanitas CEO, said.
Jelfa lost some PLN 60 million in revenues as the company sought to reduce excessive stocks on the wholesale market.
Sanitas group has lost some PLN 64.4 million in revenues on the Polish market this year. The group is now projecting the losses of LTL 9 million as opposed to previously forecast net profit of almost LTL 14 million.
Kauno Diena

Baltic States have no objection to Poland's involvement in new reactor project
Lithuania, Latvia and Estonia do not object to Poland's involvement in the project of construction of a new nuclear reactor in Lithuania, but set additional conditions.
After a meeting of the Council of Prime Ministers of the Baltic Council of Ministers in Vilnius on Friday, Latvian Prime Minister Aigars Kalvitis said that Latvia did not object to Poland's involvement in the project, but wanted it to continue without any stops.
The Baltic States have signed an agreement on implementing the project of construction of a new reactor together. Lithuania would like its neighbour and strategic partner Poland to join it, however, according to press reports, Latvia has expressed discontentment about it.
"We are not halting the project. If the Poles present their proposals on time, everything will be all right. And as far as their conditions are concerned, this is another matter," Lithuanian Prime Minister Gediminas Kirkilas said.
Estonian Prime Minister Andrus Ansip was stricter towards potentially new partners that would take part in the construction of a new nuclear facility.
Back in March, the Baltic prime ministers made a political decision on the construction of a new reactor, and energy companies of the three countries prepared a feasibility study in late October.
Kauno Diena

Consumer prices up 0.8 percent over November
Consumer prices rose by 0.8 percent in Lithuania in November versus October. Average twelve-month inflation made up 3.6 percent last month, while the annual inflation (November versus November 2005) reached 4.4 percent.
The rise in consumer price index (CPI) largely resulted on a 1.4 percent rise in the prices of foodstuffs and soft drinks, a 2.2 percent surge in the prices of accommodation, water, electricity, gas and other fuel, a 0.5 percent increase in the prices of alcohol and tobacco, a 0.4 percent rise in the prices of footwear and clothing, and a 1.1 percent increase in the prices of other goods and services.
Lietuvos Zinios, Respublika

Friday, 8th of December

Lithuania's parliament backs 30 percent rise in tobacco excise taxes
The excise tax rates levied on tobacco products will be raised by 30 percent from March 1, 2007, under the new amendments to the Law on Excise Duties adopted by the parliament on Thursday. With the new rates in effect, the price of most popular cigarettes will rise by approximately 14 percent per package. Moreover, the measure will add some LTL 20 million in budget revenues.
As part of its pre-accession commitments, Lithuania has obliged to raise the tobacco excise taxes gradually till December 31, 2009, to reach the minimum EU rate. Excise tax rates will be gradually raised each year till 2010.
Lietuvos Zinios, Lietuvos Rytas, Respublika

Lithuania to invest part of money from Mazeikiu refinery sale
Lithuanian Finance Minister Zigmantas Balcytis has said that the government did not hedge the sale of a one-third stake in the Mazeikiu Nafta refinery against currency fluctuations, but it plans to invest the proceeds to earn more money.
Speaking at the parliament on Thursday, Balcytis said that the government was planning to invest part of the proceeds from the sale into bonds.
"We have several offers. We will use them and will be able to gain up to LTL 6 million monthly," he said.
Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios

Producer prices shrink 0.4 percent in Lithuania
Producer prices or the prices for manufactured goods at the factory gate declined by 0.4 percent in Lithuania in November versus October, brought down mostly by a drop in prices of petroleum products.
Compared with November 2005, the producer prices rose by 1.7 percent. With petroleum products excluded, the prices soared by 4.3 percent in the reporting period.
The producer prices of goods sold on domestic market edged down by 0.01 percent over November, while wholesale prices of exported goods declined by 0.8 percent in the reporting period.
Verslo Zinios

Thursday, 7th of December

Top executives of Alytaus Tekstile resign
Nerijus Eidukevicius has confirmed that he is resigning as chairman of the management board at Lithuania's financially troubled cotton textile manufacturer Alytaus Tekstile. Virginija Graudiniene, managing director of the state-controlled company, is also stepping down from her post.
Ricardas Slapsys, an aide to Economy Minister Vytas Navickas, said that there had been no conflict between the minister and Graudiniene.
"The minister said that the company was in a very bad financial condition and there had been delays in paying salaries to employees, so the managing director's salary had to be reduced. She did not agree with that," Slapsys said.
Eidukevicius, a former deputy economy minister, has headed Alytaus Tekstile since April 2004. His resignation is yet to be accepted by the company's management board.
The state owns a 69.56 percent stake in Alytaus Tekstile. Estonia's Tolaram Investments, which is part of the Singaporean-based Tolaram Group, holds a 15.31 percent interest in the company.
Kauno Diena, Respublika, Lietuvos Rytas, Verslo Zinios

Lithuanian unemployment rises to 3.3 percent in November
Unemployment in Lithuania rose to 3.3 percent of the workforce in November from 3.2 percent in October. The number of officially registered unemployed people was 70,500 as of Dec. 1, a decrease of 13.7 percent, or 11,200 jobless, from a year ago.
The highest unemployment rate was in the district of Ignalina, 7.3 percent, while the lowest was in the district of Elektrenai, 0.8 percent. Among major cities and towns, Siauliai boasted the lowest jobless rate, 2.2 percent, while the highest rate was in Panevezys, 5.1 percent.
Kauno Diena, Lietuvos Rytas, Lietuvos Zinios

Lietuvos Pastas privatization seen no earlier than 2009
A partial privatization of Lietuvos Pastas is unlikely to take place before 2009, a Transport Ministry official said. The ministry plans to announce an international tender for a feasibility study on Lietuvos Pastas' privatization. The study would be completed by the end of 2008.
Valdemaras Salauskas, undersecretary of the Transport Ministry, said that the value of the company was not high and ought to be increased.
Lietuvos Pastas is currently 100 percent owned by the state. Private investors will be allowed to own shares in the postal operator in the future, but the government will retain control of the company.
Kauno Diena

Wednesday, 6th of December

Shareholders okay Mazeikiu Elektrine merger into Mazeikiu Nafta
Shareholders of Lithuania's Mazeikiu Nafta on Tuesday gave the go-ahead for Mazeikiu Elektrine's merger into the oil refining and transportation company. The shareholders approved the terms and conditions for the reorganization of Mazeikiu Elektrine, which will cease to exist after the merger, and the amended Articles of Association of Mazeikiu Nafta.
One share in Mazeikiu Elektrine will be exchanged for 0.86 shares in Mazeikiu Nafta under the terms of the merger, which is planned to be completed by the end of this year. Mazeikiu Nafta owns 85.72 percent of the heat and power plant, which supplies electricity and heating to the oil refinery. Germany's E.ON holds a 10.9 percent stake. Lietuvos Zinios, Respublika

Germany's KfW to finance regional projects in Lithuania via Siauliu Bank
German financial group KfW Bankengruppe is set to extent a new credit line to Lithuania's fast-growing Siauliu Bankas for financing of municipal infrastructure projects. Siauliu Bankas said a cooperation agreement would be signed in Vilnius on Thursday.
In Lithuania, KfW has to date provided two 10-million-euro loans to SEB Vilniaus Bankas, a 10-million-euro loan to Hansabankas and a 5-million-euro loan to Medicinos Bankas.
Lietuvos Zinios

Lithuania's parliament to adopt 2007 budget law on December 7
Lithuania's Parliament has ruled to adopt the revised 2007 budget draft on Thursday, December 7. On Tuesday the lawmakers held the second reading of the draft.
"All proposals were considered while making improvements to the draft. Assignations have been raised by additional LTL 169 million in the draft submitted today," said Finance Minister Zigmantas Balcytis.
The revenues of the national budget of 2007, including the EU funds, are seen growing by approximately 14.8 percent versus 2006. Expenditures should rise by 12.1 percent, compared with the figure projected for this year. The national budget revenues, including the EU funds, should reach LTL 22.154 billion in 2007, while the expenditures have been projected at LTL 23.595 billion.
Respublika, Verslo Zinios

Tuesday, 5th of December

One more ferry for Norwegian shipyard
Vakaru Laivu Statykla, a subsidiary of Lithuania's Vakaru Laivu Gamykla, which is controlled by Estonia's BLRT Grupp, has completed a yet another LTL 7.08 million worth ferry construction project. The car and passenger ferry ordered by Norwegian ship building and repair company Fiskerstrand Verft will depart to Norway on Thursday. In November VLS and Fiskerstrand Verft concluded one more contract on the construction of a ferry hull. VLS has already filled up its order portfolio for 2007 - the company will build four ferries, with the overall value of works put at LTL 50.24 million.
Lietuvos Rytas, Respublika

Credit24 seeks to enter Lithuania's credit market
Estonia's Mobile Credit Baltic, the provider of immediate short-term credits under the brand name of Credit24, is entering Lithuania's market. The company, which is also active on Finland's market, has published an announcement of two vacancies - the head of customer service unit and financier - in Lithuania's press.
Marius Zaikauskas, Credit24 manager in Lithuania, said that the company only offered credits to private customers.
"Our services are similar to consumer loans offered by commercial banks, however, they stand out with certain advantages," Zaikauskas explained.
Lietuvos Zinios

Lithuania may exchange national currency into euro in 2010 or later
Lithuania's government believes that Lithuania will be best poised to join the euro zone from 2010. According to the national 2006 program of convergence, which should be approved by the government on Wednesday and submitted to the European Commission, Lithuania's inflation, which should rise in 2006-2007, is expected to get closer to the euro zone level gradually after the stabilization of crude and natural gas prices and adjustment of excise duties to meet the EU norms. Previously the government said it would seek to adopt euro in 2010.
Meanwhile, the program includes the projections that Lithuania's GDP would grow by 6.3 percent in 2007, while in 2008 and 2009 the growth would slow down to 5.3 percent and 4.5 percent, respectively. The government believes that the public budget would be balanced in 2009, while in 2008 the fiscal deficit would reach 0.5 percent of GDP.
The restoration of residential savings and titles to real estate posed the biggest fiscal threat, the program said.
Kauno Diena, Lietuvos Zinios

Monday, 4th of December

New car registrations surge 40 percent in Lithuania
A total of 16,862 new passenger and commercial vehicles were registered in Lithuania in the first eleven months of 2006, a rise of 40 percent from the year-earlier figure of 12,067. In November alone, the number of new car registrations totalled 1,620, up by 37.5 percent versus November 2005. The number of passenger vehicles registrations soared by 38 percent, to 1,243, while the number of registered new commercial vehicles expanded by 35, to 377, last month.
The top three makes in November showed Volkswagen with 216 new cars registered, Skoda (167) and Toyota (138). Last month the top three models for personal use included Fiat Panda with 49 new cars registered, Subaru Legacy (45) and Ford Focus (40).
Kauno Diena

Klaipedos Nafta posts revenue of LTL 67.6 million
Lithuania's state-run oil product terminal operator Klaipedos Nafta posted revenue of LTL 67.6 million for the first nine months of this year. It did not publish its revenue figures for January-November 2005. The terminal handled 5.119 million tons of oil products during the 11 months of this year, down 3.8 percent year-on-year. The handling of oil products fell to 449,400 tons from 466,300 tons.
The terminal's main customer, Mazeikiu Nafta, has halved its oil product exports via Klaipeda after a fire at its refinery on October 12. Mazeikiu Nafta, the only oil refining complex in the Baltics, supplies more than 80 percent of all products handled at the Klaipeda terminal.
Klaipedos Nafta, which is 70.63 percent owned by the state, posted a net profit of LTL 14.73 million for the first nine months of this year, a rise of 56 percent from a year earlier. Revenue for this period fell by 14.3 percent to LTL 56.62 million.
Verslo Zinios

PKN Orlen CEO to come to Vilnius on Monday
PKN Orlen President Igor Chalupec and other senior executives of the Polish oil group are coming to Vilnius on Monday to discuss details of the closing of the acquisition of a 30.66 percent stake in the Mazeikiu Nafta oil refinery from the Lithuanian government. Chalupec is scheduled to meet with President Valdas Adamkus, Prime Minister Gediminas Kirkilas and Deputy Economy Minister Vytautas Nauduzas.
Nemira Pumprickaite, an aide to the prime minister, said that Kirkilas and Chalupec would discuss the date, scenario and other matters related to the closing of the transaction.
Concrete procedures for the closing of the deal will be discussed at the Economy Ministry, where documents of the transaction are to be signed.
Lietuvos Zinios, Verslo Zinios

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