Observer "Lietuva"
Lithuania Business News: Archive 2003-

WEEK 24.2008

Saturday, 14th of June

Salaries increase in Lithuania
Twelve people earned 0.1-0.5 million litas per month in Lithuania last year, up from 8 in 2006. Almost a half of Lithuania's employees - 47.5 percent - earned less than 1,000 litas per month last year, down from 56 percent in 2006. The share of those earning 1,000-2,000 litas per month increased to 27.9 percent, from 26.7 percent in 2006. 14.3 percent of employees had the monthly gross wages of 2,000-3,000 litas last year, up from 10.4 percent in 2006. The share of those earnings 3,000-4,000 litas per month grew to 5.37 percent, from 3.55 percent in 2006, 4,000-5,000 litas - to 2.27 percent, from 1 percent, and 5,000-10,000 litas - to 2.3 percent, from 1.12 percent of the employed in 2006. Less than 1 percent earned more than 10,000 litas per month both in 2007 and 2006.
Lietuvos zinios, Lietuvos rytas

Russia lifted ban
Russia has lifted a ban on the imports of cheese from Rokiskio Suris (Rokiskis Cheese), a leading Lithuania's dairy group, which was to come into effect on Jun. 16.
Russia's Federal Service for Veterinary and Phitosanitary Inspection lifted the ban after the review of information submitted by Lithuania and the results of additional tests. “We did not consider it a big problem, this was not an exceptional case - such things did happen from time to time. We expected the ban to be lifted soon." Dalius Trumpa, Rokiskio Suris chairman, said. He noted that the ban only concerned the imports.
Lietuvos rytas, Respublika

Shareholders of VST fail to distribute profits
The shareholders of VST, the operator of power grids in the western part of Lithuania, postponed the distribution of 2007 profits for the third time on Friday as they decided to wait for a mandatory buyout offer to be placed by Leo LT, the majority owner of VST. The general shareholders' meeting was called off amid absence of quorum. Earlier the board of VST proposed to shareholders to carry the whole amount of distributable profit - 620.611 million litas – this year.

Friday, 13th of June

Rokiskis Cheese is banned from Russia
Russia has banned the import of products from Rokiskio Suris (Rokiskis Cheese), one of Lithuania's biggest dairy groups, effective from June 16. Russian media have reported that the Russian Agricultural Control Office has imposed the ban on Rokiskio Suris' products due to alleged violations of veterinary-sanitary requirements. Meanwhile, the Lithuanian State Food and Veterinary Service said on Thursday that its checks on the products had found no violations of the established requirements.
He said that Rokiskio Suris was unlikely to suffer losses as a result of the ban because Russian distributors had a sufficient stock of its products.
Lietuvos Rytas, Respublika, Verslo Zinios

Competition Council suspects Maxima LT in violations
The Lithuanian Competition Council suspects that Maxima LT, the country's largest retail chain, in 2002 through 2006 acquired and leased real estate in various cities and towns around the country in violation of anti-trust legislation. The authority said on Thursday that it had decided to launch a probe into whether Maxima's actions were in line with the Competition Law. The Competition Council is of the preliminary opinion that Maxima LT should have informed it about these transactions since annual revenue of the companies from which it purchased or leased real property exceeded the five-million-litas limit set by the law, it said. "If it is established that Maxima LT had the obligation to notify (the Council) of these transactions, the company might be obliged to restore the previous situation or eliminate the consequences of these transactions. It might be fined as well," Palmira Kvietkauskiene, the competition authority's spokeswoman, said.
Respublika, Lietuvos Rytas, Verslo Zinios

Loans extended to retail customers reach LTL 25.58
Total loans extended to retail customers by eleven commercial banks and foreign bank branches operating in Lithuania reached LTL 25.58 billion in late April, a rise of LTL 1.903 billion, or 8 percent, from the start of the year. Housing loans increased by LTL 1.407 billion, or 8.8 percent, over the four months to LTL 17.304 billion, according to data from the Lithuanian Banks' Association. Consumer loans totaled LTL 2.619 billion as of late April, LTL 181.4 million, or 7.4 percent, higher than at the start of the year.
Verslo Zinios

Thursday, 12th of June

Leo LT sets buyout of VST shares
Leo LT, Lithu Color ania's national investor company, has set the buyout price of VST, the operator of power grids in the western part of the country, at LTL 757.41 per share.On Wednesday the Securities Commission approved the circular of mandatory tender offer for the buyout of VST by Leo LT. The tender offer will be in effect for 14 days. Leo LT, which currently owns 97.1 percent of VST, will have to pay LTL 81.678 million for all remaining shares in VST. VST, which is quoted on the I-List of Vilnius Stock Exchange (VSE), traded for LTL 721 on Wednesday.
Respublika, Verslo Zinios

Lithuania lags behind other EU states
Lithuania only outpaces Bulgaria and Romania among the European Union (EU) newcomers in terms of business environment attractiveness and ranks the eighth among new EU Member States from Central and Eastern Europe (CEE), the latest survey by the Economist Intelligence Unit (EIU), the research and consulting unit of influential UK business magazine "The Economist", has shown. Yet, the gap between Lithuania and Poland, Hungary and Latvia, which ranked 5-to-7th, was not too big, the EIU said. "Lithuania usually competes with other two Baltic countries the most. However, it lags behind them in this respect. Yet, the gap between Lithuania and, for example, Latvia, is very small," John Andrew, EIU CEE deputy editor, said during the international conference Lithuania in the World: Competitive or Outcompeted? hosted by Vilnius.
Lietuvos Zinios, Respublika, Lietuvos Rytas, Verslo Zinios

Natural milk purchase declines
The average natural milk purchase price declined by 7.75 percent, to LTL 831.7 per ton, in Lithuania in May from April. Compared with May 2007 the average purchase price rose by 13.4 percent, the Agriculture Ministry reported. In the five-month period, the average milk purchase price made up LTL 1,038.9 per ton, up 31 percent year-on-year. The total volume of natural milk purchased from farmers in May rose by 7.68 percent from a year earlier to 128,210 tons. In the first five months, milk purchase volumes were up 4.7 percent year-on-year to 495,400 tons.
Lietuvos Rytas

Wednesday, 11th of June

Lithuanian central government collected LTL 7.45 billion
The Lithuanian central government collected LTL 7.45 billion in budget revenues in the first five months of this year, LTL 61.4 million or 0.8 percent above its revenue target of LTL 7.389 billion, the Finance Ministry reported on Tuesday. Total revenues for the five months, including assistance funds from the EU and other foreign countries, amounted to LTL 9.578 billion. Monthly revenues for May came in LTL 6.7 million or 0.5 percent above the target to reach LTL 1.294 billion. Overall revenues including EU money and other foreign aid were LTL 1.361 billion. Respublika, Verslo Zinios

AirBaltic presents figures
Latvia's national airline Airbaltic carried 245,300 passengers to and from Vilnius Airport during the first five months of this year, up 23.8 percent from 198,100 passengers a year earlier. The total number of passengers in Vilnius and Riga increased by 30 percent over the reporting period to 868,900, the company said in a press release on Tuesday. The airline's load factor on Vilnius routes in May rose by 2 percentage points year-on-year to 64 percent, it said. The Latvian state owns 52.6 percent of Airbaltic and the Scandinavian airline SAS holds a 47.2 percent stake.

Predictions of Moody’s
While a "soft landing" remains the main scenario for Lithuania, there is a significant risk that the economy could slow at a much quicker pace than expected, Moody's Investors Service has said. "Although a 'soft landing' is still the primary scenario, there is a significant risk that the economy could continue to slow much more quickly than forecasted, as has happened in neighboring Latvia and Estonia," the ratings agency said in a credit opinion. "Such scenario would place additional pressure on government revenues in the run-up to national elections in October 2008, threatening the planned fiscal consolidation," it said. Despite the weakening of domestic demand at the start of this year, "Lithuania's current account deficit widened again. Inflation has demonstrated strong momentum and continued to increase, aided by rising administrated prices and higher global prices for food and energy," Moody's said.
Verslo Zinios

Tuesday, 10th of June

Lithuania’s Securities Commission imposed a fine on PZU Lietuva
Lithuania's Securities Commission (VPK) has imposed a LTL 35,000 fine on Polish-equity non-life insurer PZU Lietuva for the manipulation with stocks of Vilniaus Degtine (Vilnius Vodka) on the market. On December 28 PZU Lietuva submitted a buy order and, when concluding a transaction on the purchase of five stocks of Vilniaus Degtine, raised the price of those shares artificially by 8.33 percent, VPK said in a statement. According to the commission, the transaction was concluded on the last trading day of 2007 at the end of the trading session, thus had an impact on 2007 results of investment activities of the investors having Vilniaus Degtine stocks in their portfolios.
Respublika, Verslo Zinios

Gasoline prices
The retail price of most popular 95-grade gasoline has crossed the psychological LTL 4 per liter barrier at Lithuania's gas stations for the first time ever. The prices of 95-grade gasoline made up LTL 4.03 per liter at the stations of Statoil chain in the majority of Lithuania's cities on Monday. The retail prices at other chains were somewhat lower. "As per our knowledge, this is the first time ever for regular 95 grade gasoline with no additives to reach the LTL 4 threshold in Lithuania. Gasoline with additives crossed that barrier earlier," Skirmantas Maciukas, director of sales and supply department at Lietuva Statoil, said. At Lukoil stations, the retail price of 95-grade gasoline stood up to LTL 3.97 per liter in Lithuania's cities on Monday. At Orlen stations, the retail prices of that type of gasoline ranged from LTL 3.9 to LTL 3.92 per liter. The prices of gasoline would not decline in coming days, Maciukas projected.
Kauno Diena, Respublika, Verslo Zinios, Lietuvos Rytas

Discontent of the Ex-President
Lithuania's ex-president and ex-PM, honorary chairman of the Social Democratic Party Algirdas Brazauskas slams fiscal policy pursued by the Social Democrats-led government. "We have to remove all breaks, which give nothing to people, impose taxes on property, same as all over the world, introduce taxes on profit. The biggest problem in Lithuania is erratic, abnormal fiscal policy," Brazauskas said in an interview to the Veidas magazine. Social Democrats-led government was implementing such a policy since the tax system was a "hundred-percent prerogative" of the parliament, he added. "In fact nothing is being done with the tax system. There is some liberalization, although only when it concerns some exemptions, some breaks. Lithuania loses some LTL 1.5 billion if compared with Latvia or Estonia, due to VAT breaks applied as a result of various initiatives of the parliament. There are breaks on vegetables, meat, yet these are completely lost in the profits of large retail chains," Brazauskas said.
Verslo Zinios

Monday, 9th of June

Lithuanian import
Lithuania imported almost 1.031 billion cubic meters of natural gas from Russia in the first three months of this year, down 13.5 percent versus the year-earlier imports of 1.192 billion cubic meters. Lietuvos Dujos (Lithuanian Gas), the natural gas utility and key importer, cut the imports by 27.4 percent, to 372.5 million cubic meters in the reporting period. The imports by Dujotekana declined by 4.2 percent, year-on-year, to 183.7 million cubic meters, by Haupas - went down by almost 0.2 percent, to 6.57 million cubic meters in January-March, the Economy Ministry said in its first quarter national economy overview.
Verslo Zinios

Invalda intends buying out some shares
Lithuanian-equity investment company Invalda intends to buy out some shares and confirm a policy of payouts to shareholders and the management. The shareholders will consider relevant proposals at an extraordinary meeting due on July 9, Invalda has said in a statement. The buyout for Invalda, which now trades for LTL 13.75 on the stock market, will be the first ever in the company's history. The shareholders will also choose the auditors and define the terms and conditions of their payment, approve the policy of payouts to shareholders and the management, other issues.
Verslo Zinios

Reviews by the journalist
Not mutual agreement, but victory is Russia's driving force, therefore European Union's (EU's) and Russia's cooperation cannot be effectively seen as victory on both sides, Central and Eastern Europe correspondent for the Economist Edward Lucas said. According to the British journalist, who was visiting in the Lithuanian Seimas Friday, Russia sees the reciprocity of international agents as a game, where one ends up a winner, and the other a loser. For this very reason, Lucas is sceptical of the possibility of EU-Russia cooperation and suspects Russia of simply aiming to reap all the fruits of EU partnership. Lucas noted in a discussion that a zero-bid game is most natural to Russia, adding that the country transports billions of cubic meters of gas to the West and keeps up an active battle only for the sake of winning, and not for just reaching an agreement with the EU or the West in general. According to the author of the New Cold War: How the Kremlin Menaces Both Russia and the West, the Western world should be more reactive to the growth of Russia's "soft" power and take relevant action, i.e. respond to the information war and implement uncompromised management.
Verslo Zinios

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