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Lithuania Business News: Archive 2003-

WEEK 49.2007

Saturday, 8th December

Negotiations about the private investor did not succeed
The Lithuanian government and NDX Energija, a privately owned firm that operates the western half of the country's power distribution grid, have so far failed to agree on a model for creating the so-called "national investor" in key energy projects.
The government proposes to establish the national energy company by merging the two distribution grid operators, the state-run RST and the NDX Energija-controlled VST, into the state-controlled Lietuvos Energija (Lithuanian Energy), a model set out in a law on the planned new nuclear power plant. NDX Energija proposes to establish a new parent company with Lietuvos Energija, RST and VST as subsidiaries. Economy Minister Vytas Navickas did not rule out on Friday that NDX Energija's position might be submitted to the government and later to the parliament for approval. "Our proposal is to create (the national energy company) on the basis of Lietuvos Energija. However, from the legal point of view, creating a parent company, as proposed by the other negotiating party, would be a simpler option, because procedures would be faster and more effective," Navickas said, speaking to reporters after a meeting of the negotiating teams, which lasted four hours.
Kauno Diena, Lietuvos Zinios

Fitch ratings revised the outlook on Lithuania's long term foreign and local currency ratings
Fitch Ratings revised on Friday the outlook on Lithuania's long-term foreign currency and local currency ratings to negative from stable, citing inflationary pressures and a possible delay in euro adoption. At the same time, the international rating agency affirmed Lithuania's long-term foreign currency rating at A, long-term local currency rating at A+, short-term foreign currency rating at F1 and country ceiling at AA. "The fact that the credit rating agency Fitch has changed the outlook on Lithuania's rating from stable to negative is not pleasant to us, but we make no tragedy out of it either," Prime Minister Gediminas Kirkilas said, commenting on Fitch's report. The premier said in a statement that a deeper analysis showed that Lithuania's current macro-economic situation was "in essence sustainable". "Although the increased inflation and current account deficit are a cause for concern, there is no major risk of overheating," he said. "The negative outlook reflects rising inflationary pressures, a further prospective delay to euro adoption -- which Fitch does not expect until 2013 -- a marked deterioration in Lithuania's external imbalances, and uncertainty over how the country will secure a gradual adjustment to a more sustainable growth path," said Ed Parker, head of Fitch's emerging Europe sovereigns group. Fitch forecast that Lithuania's current account deficit would widen to almost 14 percent of GDP in 2007, from 11 percent in 2006. Lithuanian bonds fell after the outlook downgrade, with the 2013-euro issue losing 0.330 points in price.
Respublika, Lietuvos Rytas

Sanitas presents numbers
Sanitas, the owner of pharmaceutical plants in Lithuania, Poland and Slovakia, reported almost LTL 310,794 million in eleven-month sales and warned that it might miss full-year revenues forecast amid a decline in US dollar. This year's sales are by 2.3 times bigger than last year during the same period.

Friday, 7th of December

New excise duties from the new years
The rate of excise duty levied on fuel will grow by some 12 percent from January, while the rates imposed on beer and other spirits will increase by 10 percent and 20 percent, respectively, in line with the latest amendments to the Law on Excise Duties passed by the parliament on Thursday with 79 votes for and six abstentions. The amendments also stipulate a 17 percent increase in the rate of excise duty levied on cigarettes from March 1. The rates of excise duties will be raised considering Lithuania's obligations to the European Union (EU). Lithuania shall lift the rates of excise duty on cigarettes gradually so as to reach the minimum rate - 57 percent of average retail price of most popular cigarettes.
Lietuvos Zinios,Kauo Diena, Lietuvos Rytas

Baltikums Draudimas stops its activities
Lithuania's Insurance Supervisory Commission (ISC) said on Thursday that it has decided to suspend the insurance license of the Latvian-owned insurance company Baltikums Draudimas from December 11. The financial standing of Baltikums Draudimas does not comply with the requirements of the law and is not sufficient to develop its insurance operations, the ISC said, explaining the reasons for the decision, which it made on Tuesday. Also, the company has itself requested a suspension, it said. The supervisory authority underlined that the suspension would not exempt the company from fulfilling its obligations under the existing insurance policies.
Kauno Diena, Respublika, Verslo Zinios, Lietuvos Rytas, Verslo Zinios

Budget for 2008 is adopted
The Lithuanian parliament adopted on Thursday a 2008 budget projecting a one-third increase in revenue and expenditure next year, compared with this year.
The budget passed by a vote of 83 to 22, with 15 abstentions. The central government budget for 2008 projects LTL 25.57 billion in revenue and LTL 26.6 billion in expenditure, leaving a deficit of LTL 1.001 billion. The national budget's revenue should reach LTL 29.407 billion next year, with expenditure planned at LTL 30.408 billion. The national budget includes both the central government and municipalities. Based on the EU standards, the one-billion-litas deficit will account for 0.5 percent of the country's GDP. The government has described the 2008 budget as "socially oriented", but opposition parties have criticized it for earmarking insufficient funds for healthcare and education.

Thursday, 6th December

Snoras wishes to enter new markets
Lithuania's Snoras is looking to enter new markets and increase its presence in existing ones, the bank said on Wednesday.
"We are exploring new markets -- in the Balkans, where business is set to grow and flourish. Croatia, Serbia, Macedonia and Montenegro are very interesting markets," Raimondas Baranauskas, Snoras' board chairman and one of its two largest shareholders, said at a news conference. "We want to return to Cyprus. The profit tax in that country offers good business conditions and it would be possible to set up a branch there. Once we have analyzed the situation, I think we will take a positive decision on the establishment of a branch in that country," he said. Next year Snoras plans to convert its representative offices in Estonia, Belgium and the Czech Republic, and possibly Ukraine, into branches. However, it does not plan to do so in Belarus. "We are not confident that we can be successful there, because there are many restrictions," said Baranauskas.
Respublika, Lietuvos Rytas

Rokiskio Suris presents its numbers
Rokiskio Suris (Rokiskis Cheese), one of the largest dairy groups in Lithuania, said on Wednesday that its consolidated sales for the first 11 months of this year jumped by 33.9 percent year-on-year to LTL 623.238 million.
Consolidated sales for November rose by 22 percent from a year earlier to LTL 51.985 million, Rokiskio Suris reported to the Vilnius Stock Exchange (VSE). The dairy group posted LTL 30.042 million in consolidated net profits for the first nine months of this year, a threefold increase from LTL 10.053 million in the same period last year. Rokiskio Suris is listed on the blue-chip Main List of the VSE.
Lietuvos Rytas

Spyker Cars is negotiating with Dutch car luxury manufacturer
Spyker Cars is in talks with an unnamed bank in Lithuania about a possible investment in the Dutch luxury car manufacturer, Thomson Financial reported on Wednesday, citing a report in the Dutch newspaper De Telegraaf.
Spyker Cars Director Victor Muller told De Telegraaf that the possible deal would not involve the sale of a stake in the company, but would be a financial investment.
Kauno Diena, Lietuvos Rytas

Wednesday, 5th December

Customer loyalty index in Lithuania's supermarket industry is low
The customer loyalty index in Lithuania's supermarket industry is low, at 63 points out of possible 100, a survey by GfK CR Baltic showed on Tuesday. Internationally, a market is considered to be loyal if this index is 75 or higher. The loyalty index is comprised of four components, such as customers' current shopping habits, their future intentions, rational choice and emotional connections. GfK CR Baltic noted that shoppers had very similar levels of loyalty to all three major supermarket chains, Maxima, Iki and Norfa, based on all four components.

Former president of Dvarcionui Keramika confirms selling shares
Juozas Raiselis, former president of Dvarcioniu Keramika (Dvarcioniu Ceramics), has confirmed that he has sold 17.97 percent of Lithuania's tile company to Poland's Opoczno for LTL 7.1 million. Raiselis sold the stake on November 29 at LTL 4 per share, the Securities Commission (VPK) reported. Dvarcioniu Keramika traded for LTL 3.5 on Tuesday, bringing the company's market capitalization to LTL 34.7 million. Opoczno now owns 79 percent of Lithuania's tile maker. As reported earlier, Opoczno may transfer its tile companies in Lithuania and Poland to Cersanit, the largest single shareholder of Opoczno and the leader of Polish tile production industry. Michal Solowow, one of key shareholders of the Polish companies, has admitted that Opoczno and Cersanit might be merged.

Duke House Asset Managers intends selling Gedimino 9
Irish company Duke House Asset Managers expects to get up to EUR 100 million for its Vilnius Gedimino 9 shopping centre. The representatives of the Dublin-based company had refused to make any comments, the Irish Independent daily reported.According to earlier reports by Lithuania's media, Duke House Asset Managers has announced a tender for a buyer of Gedimino 9 mall. The reports put the value of transaction in excess of LTL 200 million. The mall was opened in April after the reconstruction that took a year and a half to complete. The Irish businessmen purchased the building, the former seat of Vilnius local authority, for LTL 45.5 million and invested LTL 120 million into its refurbishment.
Lietuvos Rytas

Tuesday, 4th of December

IKI is renaming its Leader Price stores
Lithuania's second-biggest retail chain Iki is renaming its Leader Price discount stores in Lithuania and Latvia as Cento, the company said on Monday. The new name refers to a centas, one hundredth of a litas. The discount chain is being renamed after Palink decided not to renew its franchise agreement with France's Casino Group for the use of the Leader Price brand, Iki said. Leader Price Polska, an independent retail chain owned by Casino Group, ceased operations last summer. Leader Price discount stores in Lithuania and Latvia operated under a franchise arrangement.
Respublika, Kauno Diena, Verslo Zinios, Lietuvos Rytas

Lithuania has no reasons to devaluate the national currency
Lithuania has no reasons to devalue the national currency, the litas, the governor of the Bank of Lithuania has said repeatedly and warned that the subject should not be joked about. "I have said it very clearly - there is no ground, no conditions, no necessity either to devalue or revalue [the litas]. The devaluation would not solve anything, on the contrary, it would boost the inflation several times. I would say it is a too important question having an effect on all our people, and such things should not be joked about," Reinoldijus Sarkinas said. Speculations about the devaluation of national currency have recently intensified in Latvia, which has been plagued by high inflation of lately.
Kauno Diena

FlyLAL adds four plane to its fleet
Private equity FlyLAL-Lithuanian Airlines, Lithuania's flagship carrier, has added the fourth plane to its fleet in one year. The carrier leased Boeing 737-300 from Aviation Assets Management, a company within FlyLAL group, FlyLAL-Lithuanian Airlines said in a statement. "Similar to other aircraft acquired before, this Boeing 737-300 will be employed for both regular and charter flights," Tadas Puksta, FlyLAL-Lithuanian Airlines CEO, said in a statement. The fleet of FlyLAL-Lithuanian Airlines currently includes three Boeing 737-300 planes, four Boeing 737-500 and four Saab 2000 planes. The carrier aims to boost its fleet to 12-14 planes by 2009.
Lietuvos Rytas

Monday, 3rd of December

Minimum salary rises
The minimum monthly salary showed the steepest rise in Latvia in October year-on-year, compared with other Baltic countries, although the monthly amount of minimum salary remained the highest in Estonia. In Lithuania, the minimum monthly salary totaled LTL 700.9 in October, up 16.7 percent versus October 2006 and unchanged versus September, the country's Statistics Department reported on Friday. Lithuania's minimum monthly salary exceeded the respective rate in Latvia by LTL 110.5 but was LTL 93.2 lower than the minimum monthly salary in Estonia in the reporting period. In Latvia, the minimum monthly salary soared by 33.3 percent over a year to October and was unchanged versus September.
Verslo Zinios

Combines revenues of Lithuania's services companies increase
Combined revenues of Lithuania's services companies for the first nine months of this year jumped by 30.2 percent year-on-year to LTL 12.6 billion the Statistics Department reported on Friday. Sales revenues in all parts of the services sector increased this year, but the strongest growth was recorded in real estate operations (up 35.9 percent), recreational, cultural and sporting activities (up 32.3 percent), other business activities (up 29.5 percent), and healthcare and social services (24.3 percent it said.
Verslo Zinios

Economic sentiment index rises
Lithuania's economic sentiment index rose by 2 percent up to 12 percent in November of 2007, comparing it with October, the Statistics Department reported on Friday.
It attributed the increase in the composite indicator to rises of 4 percentage points in industrial confidence, 6 points in services confidence and 8 points in retail confidence. Confidence in the construction sector weakened by 2 points and consumer confidence was down by 4 points, the department said.

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