Observer "Lietuva"
Lithuania Business News: Archive 2003-

WEEK 29.2008

Saturday, 19th of July

Gazprom’s officials are coming to Kaunas
Gazprom's officials are coming to Lithuania next week to find out why the country's authorities have started regulating the price of heating energy produced by Kauno Termofikacijos Elektrine (Kaunas Combined Heat and Power Plant, or KTE), which is owned by the Russian gas giant. KTE Director Antanas Pranculis said that Gazprom wanted to assess the situation on the spot, as well as to find out what attitude the local authorities had toward the country's sole natural gas supplier. Representatives from Gazprom and KTE intend to meet with Kaunas Mayor Andrius Kupcinskas and Virgilijus Poderys, the chairman of the National Commission for Prices and Energy. Poderys said that the situation regarding KTE was an extraordinary one. The law provides for state regulation of the price of heating energy supplied by the company starting this year.
Kauno Diena

Introduction of Euro in Lithuania - poll
Lithuanians believe that the introduction of the euro will have more negative than positive effects and do not expect to join the single European currency until 2011, the results of a Eurobarometer poll have shown. Most Lithuanians have a pessimistic attitude toward euro adoption, it found. Out of the nine EU member states that have not yet joined the single currency, it was only in Lithuanian and Latvia that the percentage of respondents expecting positive effects, 51 percent each, exceeded the percentage of those expecting negative effects, 37 percent and 31 percent, respectively. Some 71 percent of residents in the nine EU countries seeking to replace their national currencies with the single currency believe that the eurozone entry will have an impact on price rises. The highest percentage of respondents who said so was in Poland (83 percent), Estonia (78 percent), Slovakia (76 percent) and Lithuania (75 percent).Some 77 percent of Lithuanians fear cheating on prices during the changeover.
Respublika, Lietuvos Zinios

Analysts’ review
Lithuania's economy, contrary to Latvia or Estonia, still may avoid sharp decline, yet the action of authorities would be required, the analysts of Hansabankas, the second largest Lithuania's commercial bank, forecast. The analysts left the projections of Lithuania's GDP growth unchanged; yet the inflation and unemployment forecasts, as published in the latest Baltic Outlook, were revised up. Hansabankas sees Lithuania's economy growing by 6 percent in 2008 and 5.5 percent in 2009, i.e. 2-4 times faster compared with the projections of GDP growth for Latvia and Estonia in the same period. However, Lithuania's inflation forecasts, as compared with the Baltic Outlook released in late April, were revised up to 11.9 percent for 2008, from 9.9 percent, and the 2009 projection was raised to 8.7 percent, from 6.7 percent.

Friday, 18th of July

Sanitas moves into new factory
Sanitas, Lithuania's largest pharmaceutical producer, is moving next month into a new factory it has built in Kaunas with the help of EU funds. Sanitas CEO Saulius Jurgelenas said that in August the company expected to begin trial manufacturing of medicines at its new facility. "Sanitas' old factory in Kaunas has been shut down. We started relocating the production of injection preparations in the second half of April, and of tablets, in June. Once we have moved in, we will manufacture trial lots to see if the products are identical to those manufactured at the old facility," Jurgelenas said. "Then the company will have to complete all necessary certification procedures," he said.
Kauno Diena

Government divests its interest in glassmaker Panevezio Stiklas
Lithuania's government intends to divest its interest in troubled glassmaker Panevezio Stiklas in the nearest time. The company's privatization program should be announced late in August, Raimondas Sedlevicius, director of property management department with the State Property Fund (SPF), which holds 34.22 percent of Panevezio Stiklas, said. The shares would be auctioned off. Poland's Sierakow, the largest shareholder of Panevezio Stiklas, agreed to buy the remaining shares, Sedlevicius said. Panevezio Stiklas is short of both floating assets and funds for investments. "The Polish shareholders of the company have agreed with us that the privatization of shares is the only way out. They only asked when. Now we are making the arrangements, and experts are estimating the price of stocks," Sedlevicius said. Meanwhile, Panevezio Stiklas is dismissing as untrue the press reports about the looming bankruptcy of the company.
Kauno Diena, Lietuvos Rytas

Lithuania may become the member of European Space Agency
The government's Science, Technologies and Innovation Development Commission intends to propose establishing a Lithuanian space agency in 2010, which would seek membership of the European Space Agency (ESA). "I hope that the answer will be positive and the government will give the green light for our ministry to open negotiations. The country's businesses and scientists have taken interest in our ideas," it quoted Romualdas Kalytis, a senior official at the Education and Science Ministry, as saying. Among the most interested in the idea are electronics and electrical appliance manufacturers, information technology and software development companies, applied life sciences and life-support system developers, mechanics and mechatronics companies, and aviation and aerodynamics companies, including Prienai Aviation Factory, according to the paper.
Lietuvos Rytas, Kauno Diena, Respublika, Verslo Zinios

Thursday, 17th of July

Cilija may enter the Bourse
Cilija, the operator of Lithuania's biggest chain of pizza parlors and other restaurants, may float its shares on the Vilnius Stock Exchange in the future, Tadas Karosas, the company's owner, said on Wednesday. "In the future, we are planning to go public. But now is not the best time, because stock indexes have fallen sharply," Karosas said. "The stock exchange as such is a good thing. It offers the possibility to establish the value of a business and maximize it, and provides an extra guarantee of liquidity to an existing business," he said. Cilija plans to change its name into Cili Bistro. The company has several pizza restaurants in Latvia as well.
Lietuvos Rytas, Verslo Zinios

Basic pension will increase
The Lithuanian government decided on Wednesday to increase the basic pension by LTL 44 to LTL 360 and the insured income level by LTL 74 to LTL 1,488 starting August. The increase will cost the state an additional LTL 345 million this year. "Even though we raised the basic pension on January 1 this year, with product prices, home maintenance costs and medicines prices being on the rise, it is important to continue increasing pensions, state assistance benefits and other social payments from Sodra (the State Social Insurance Fund) in order to ensure sufficient living incomes," Social Security and Labor Minister Vilija Blinkeviciute said. As a result of this, all state social insurance pensions are set to rise by around 10 percent on average. About 870,000, people stand to benefit from this increase.
Lietuvos Rytas, Respublika, Lietuvos Zinios

Anzag purchased Lithuanian Armila
Anzag, one of Germany's biggest pharmaceutical product wholesalers, has purchased a 92 percent stake in the Lithuanian pharmaceutical wholesaler Armila for an undisclosed amount of money. Armila's current management team will continue to run the company, Anzag said in a press release on Wednesday. "Over the past few years, we have put in place a sustainable business model, but to keep growing, we need a strategic partner - and Anzag represents the perfect choice," Armila CEO Remigijus Mielinis said. Armila, which holds a 13 percent share of the Lithuanian wholesale pharmaceutical market, is headquartered in Vilnius and has sales offices in Kaunas, Klaipeda and Siauliai.
Verslo Zinios

Wednesday, 16th of July

Milk purchase price declines
The average natural milk purchase price declined by 3.8 percent, to LTL 800 per ton, in Lithuania in June versus May. Compared with June 2007, however, the average purchase price rose by 13.7 percent, the Agriculture Ministry reported. In the first half of this year, the average purchase price made up LTL 944.8 per ton, up 27.6 percent year-on-year. The total volume of natural milk purchased from farmers rose by 4.6 percent, year-on-year, to 633,500 tons in January-June.
Respublika, Lietuvos Rytas

New member in Leo LT
Darius Degutis has resigned as Ambassador at Large at the Economic Security Policy Department of Lithuania's Foreign Ministry to join the team of Leo LT, Lithuania's national investor company. At Leo LT, Degutis would be in charge of strategic projects and international links, Leo LT CEO and chairman Rymantas Juozaitis said. Degutis is the second public officer to exchange public service for work at Leo LT. Saulius Specius, a member of Leo LT board, previously served as PM adviser. Early this year, Degutis was offered to head a company, which was to be established for the construction of power links with Sweden and Poland. He rejected the proposal, however. Their team of Leo LT currently includes a five-strong board and 10 more employees.
Verslo Zinios, Lietuvos Rytas, Kauno Diena

Lifosa posts record profit
Lithuania's phosphate fertilizer manufacturer Lifosa posted record LTL 265.818 million in net profit for the first half of this year, up 5.4 times versus the year-earlier figure and 20.2 percent over the full-2007 profit figure. With the market situation extremely favourable, the company postponed the turnaround, initially planned for the first half of the year, till fall. "Lifosa ruled against the turnaround in the first half of this year, which, considering the circumstances and favorable situation on the market, was postponed till September," Zigmas Ezerskis, Lifosa's chief economist, said. The interim sales of Lifosa soared by 2.7 times, year-on-year, to LTL 889.664 million, while in June alone the sales surged by 3.8 times, to LTL 204.419 million.
Lietuvos Rytas, Verslo Zinios

Tuesday, 15th of July

Referendum for Nuclear Power Plant
Residents of Lithuania will be able to state their opinion on the fate of the Ignalina Nuclear Power Plant in a referendum after the parliament decided on Monday that the ballot would be held in conjunction with October 12 parliamentary elections.
The consultative (advisory) referendum will be conducted on extension of Ignalina operations until technically safe deadlines until construction of a new nuclear utility. The proposal to hold the referendum was supported by 88 parliamentarians at Monday's plenary, while five were against and 11 refrained. The leader of the Conservative party, Andrius Kubilius, expressed regret that the referendum initiative was hasty: "What is the purpose of the referendum? Receiving the nation's mandate for default of the European Union accession treaty or receiving it for negotiations?"
Kauno Diena, Respublika, Lietuvos Rytas, Lietuvos Zinios, Verslo Zinios

Fermentas International posts earnings
Canadian-registered Fermentas International, the owner of the Lithuanian biotechnology company Fermentas, posted LTL 21.4 million in earnings before interest, taxes, depreciation and amortization (EBITDA) for 2007, a rise of 29 percent year-on-year. This is the highest EBITDA in the company's history, Fermentas said in a press release on Monday. Fermentas International's annual revenue increased by 26 percent last year compared with 2006 to reach LTL 91.9 million, it said. "With demand for our products in China, India and Pakistan rising at a fast rate, we are paying much attention to this region," Fermentas International CEO and Chairman Viktoras Butkus said.
Verslo Zinios

KG group reports growth
KG Group, the leading Lithuania's agricultural product processing group, reported exports worth LTL 105 million in the first half of this year, up 70 percent year-on-year. Exports to other European Union (EU) markets soared almost twofold, to LTL 73 million in the reporting period. KG Group sold 57,000 tons of products abroad in the first half of this year, up 62 percent year-on-year. The EU markets accounted for more than a half of total exports, or 34,000 tons.
Verslo Zinios

Monday, 14th of July

VST will pay dividends
Lithuania's VST, the power grid operator controlled by the national investor company Leo LT, will pay LTL 620.611 million or LTL 166.92 per share in dividends to its shareholders. The dividends' amount corresponds to the total sum of 2007 distributable profit. The decision on 2007 profit distribution was adopted on Friday. Leo LT owns 97.91 percent of VST with the remaining 2.09 percent held by small shareholders. "The share of dividends paid to Leo LT would be channeled into the arrangements and implementation of strategic projects, i.e. the construction of new nuclear power plant and power links with Poland and Sweden. A certain part of that amount, which will not be used for those strategic projects, will be invested into government securities and time deposits," Rymantas Juozaitis, Leo LT chairman, said. Respublika

Film distributors’ revenues
Top three distributors - Forum Cinemas, ACME Filmai and Garsu Pasaulio Irasai - together accounted for 97.5 percent of overall film distributors' revenues in the reporting period. Forum Cinemas, which represents film studios 20th Century Fox, Paramount, etc., raised the interim revenues by 44.4 percent, year-on-year, to LTL 10.4 million. ACME Filmai, the representative of Sony Pictures, Summit Entertainment, Lakeshore Pictures, Lions Gate in Lithuania, ranked the second with the six-month revenues of LTL 5.13 million, down 6.7 percent year-on-year.
Verslo Zinios

Lithuanians expect to see iPhone in Lithuania
The residents of New Zealand were able to enjoy iPhone on July 11, the phone should appear in Lithuania this summer too. The owners of the renewed iPhone 3G will be able to use faster internet, the GPS place location system has been improved in the phone too. The renewed iPhone will cost USD 599-699 without an agreement in the USA, while it should cost about EUR 499-569 in Europe. Darius Maikstenas, head of strategic communication in Omnitel, said that Lithuanians’ interest in this phone exceeded the expectations, but Omnitel still does not reveal any more information.
Verslo Zinios

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