Observer "Lietuva"
Lithuania Business News: Archive 2003-

WEEK 31.2008

Saturday, 2nd of August

More passengers in Vilnius airport
Vilnius International Airport, the largest in Lithuania, serviced 1.215 million passengers during the first seven months of this year, a rise of 30.3 percent compared with the year-earlier traffic of 932,800 passengers. In July alone, the passenger traffic grew by 26.2 percent, year-on-year, to new monthly record of 221,990. Last month t he number of flights handled by the airport rose by 29.5 percent from July 2007, to 3,700. In January-July, the number of flights totaled 23,600. The passenger traffic at the airport would definitely exceed 2 million threshold this year, Arunas Marcinkevicius, the airport's spokesman, said.
Lietuvos Zinios, Respublika

Lithuanian's car market soars
Lithuania's new car market soared by 26 percent, year-on-year, with 17,639 new cars registered in January-July, the market researcher Autotyrimai has reported citing preliminary estimations. In July alone, the number of new cars registered inched up by 0.4 percent compared with the year-earlier, to 2,315. The registration of new personal cars increased by 8 percent, to 2,070; light commercial vehicles - plunged by 38 percent, to 245, last month. Germany's Volkswagen remained the top new car seller on the Lithuanian market in July with 322 cars registered last month. Toyota was the second with 183 new cars registered and Skoda was the third with 161 new cars sold during the month.

Apranga Group reports sales
Apranga group, the operator of the largest Baltic clothes retail chain controlled by MG Baltic concern, reported LTL 273.5 million in sales for the first seven months of this year, up 24.8 percent versus the year-earlier. In July alone the sales of the group increased by 10.5 percent, year-on-year, to LTL 39.9 million. Seven-month sales in Lithuania increased by 24.7 percent versus the year-earlier, Latvia and Estonia - by 26.1 percent and 21.7 percent, respectively. The group currently operates 59 stores in Lithuania, 24 in Latvia and five in Estonia.

Friday, 1st of August

Economic growth is slowing down fast
The growth of Baltic economies is slowing down faster then expected - Estonia and Latvia may slump into recession this year, while Lithuania's economic development would also miss earlier projections, the analysts of Danske Bank, the leading Scandinavian and Western European bank, forecast. According to the bank's projections, Latvia's GDP will decline by 0.5 percent this year, while Estonia's economy will expand by 0.8 percent. Lithuania's GDP should grow by 4.4 percent this year and 2.6 percent in 2009, Danske Bank said in a statement. Early in May the bank forecast Lithuania's economy to grow by 5 percent this year an anticipated the growth to slow down to 4 percent in 2009. Simultaneously, the bank revised Lithuania's annual average inflation forecast up to 11.4 percent, from 10 percent, for 2008 and to some 8-9 percent, from 7 percent, for 2009.
Verslo Zinios, Lietuvos Rytas, Kauno Diena, Lietuvos Zinios, Respublika

Increase of office space
Office space in Lithuania will increase by some 266,000 square meters this year, although more than one-tenth of new offices is projected to remain empty. Some 11 percent of new offices might fail to find any tenants, Mindaugas Kulbokas, director of appraisal and consulting department at the real estate company Colliers International, said during Thursday's news conference. In 2009 the office space is projected to increase by 367,000 square meters, and 15 percent of new offices might not be occupied. Potential tenants were in no rush to sign new contracts as they hoped for the prices to fall, said Saulius Vagonis, head of appraisal and marketing division of real estate company Ober-Haus.
Lietuvos Rytas, Lietuvos Zinios

Economic confidence is declining
Lithuania's economic sentiment index fell to minus 3 percent in July from 1 percent in June, the Statistics Department reported on Thursday. Industrial confidence declined by 3 percentage points over the month and services confidence fell by 8 points. Confidence in the construction sector decreased by 4 percent, and consumer confidence level was down by 3 points, it said. Meanwhile, confidence in the retail sector rose by 4 points over the month.
Lietuvos Rytas, Respublika

Thursday, 31st of July

Leo LT established Visaginas Nuclear Power Plant
Lithuania's national investor company Leo LT has ruled to establish a subsidiary Visagino Atomine Elektrine (Visaginas Nuclear Power Plant), which will be in charge of arrangements for new nuclear power plant project. The new company would have an authorized capital of LTL 12.7 million, which the board of Leo LT confirmed earlier on Wednesday. The founding procedures are to be finalized by September 1. The executives of Leo LT, Poland's Polska Grupa Energetyczna, Latvia's Latvenergo and Estonia's Eesti Energia agreed to establish a joint venture for the development of new nuclear power plant project at their July 25 meeting in Copenhagen. The partners agreed with Lithuania's proposal to establish a joint project development company, in which Leo LT would hold a 51 percent interest, and the partners - a 16.33 percent stake each.
Lietuvos Rytas, Verslo Zinios, Respublika, Lietuvos Zinios

Lithuania's national budget exceeds expectations
The revenues of Lithuania's national budget, which includes the central government and municipal budgets, totaled LTL 11.162 billion in the first half of this year, 1.1 percent above the interim target. The revenues of the central government budget, at LTL 9.287 billion, exceeded the six-month target by LTL 69 million. Six-month revenues of municipal budgets totaled LTL 1.875 billion, LTL 53.6 million more than planned, the Finance Ministry reported on Wednesday. Six-month revenues of the national budget on VAT made up LTL 4.788 billion, 1.5 percent below the planned amount. Revenues on income tax totaled LTL 2.362 billion, excise duties - LTL 1.648 billion and profit tax - LTL 803.6 million.
Lietuvos Rytas, Verslo Zinios, Respublika, Lietuvos Zinios

Pieno Zvaigsdes cuts down profit projection
Pieno Zvaigzdes, the leading Lithuania's dairy company, has cut its 2008 net profit projection by one-third, to LTL 14 million, after posted LTL 10.3 million in losses for the first half of this year. Full-year sales projections were left unchanged, at LTL 700 million, while the net profit margin forecast was trimmed to 2 percent, from 3 percent, as a result of interim losses, the company said in a statement. Meanwhile the sales of the dairy company rose by 7.6 percent, year-on-year, to LTL 333.3 million in January-June.
Verslo Zinios

Wednesday, 30th of July

Gazprom asks to change heating prices
Kaunas Thermal Power Plant (KTE) controlled by Russia's gas giant Gazprom has applied to the Vilnius Regional Administrative Court asking to overrule the obligation on the regulation of its heating prices, as imposed by the National Control Commission for Prices and Energy. Such demands of the panel run contrary to the agreement on the purchase and sale of heating energy as concluded by KTE and Kauno Energija (Kaunas Energy), the regional power utility, back in 2003, KTE has said in a statement. The agreement stipulates that the heating price shall remain basically unchanged during the first five years of its term and shall be recalculated afterwards in accordance with the formula set forth in the agreement. In June, however, the prices watchdog issued a writ with the demands for KTE to provide the data required for the calculation of the basic heating generation price in line with the methodology of heating prices estimation. "Such demands of the commission mean that it does not essentially recognize the terms of the agreement signed five years ago and aims to set forth the price of heating sold by KTE. We have addressed the court as we need to clarify the issue," the statement quoted Antanas Pranculis, KTE CEO, as saying.
Kauno Diena, Respublika, Lietuvos Rytas

Disturbance at Ignalina Nuclear Power Plant
Lithuania's Ignalina Nuclear Power Plant (INPP) stopped power generation as the second turbine of the sole running unit switched off unexpectedly during the shutdown of the first turbine for scheduled maintenance on Monday night. After the switch-off of both turbines the unit stopped operation at some 10:34 pm on Monday. The reasons of switch-off of the second turbine were being investigated at present, the INPP information center representatives said. The second turbine would be switched on Wednesday and the INPP would operate at 750 MW capacity for four or five days, INPP CEO Viktor Shevaldin said. "In fact nothing bad has happened, the unit has not been damaged and the radiation background remains unchanged. We are making arrangements for scheduled repairs and, in any case, the plant will still be stopped next week," he said. The whole unit was to be stopped for regular maintenance on August 2.
Lietuvos Rytas, Kauno Diena, Respublika, Verslo Zinios, Lietuvos Zinios

Losses in financial sector
Financial sector companies controlled by Lithuania's investment group Invalda posted LTL 9.5 million in aggregate losses for the first half of this year, reversing the year-earlier combined net profit of LTL 15.6 million. "The interim results of the finance sector are in line with the trends existing on the markets. The finance sector traditionally pursues long-term objectives, hence the results do not change the plans to further strengthen and develop this sphere," Invalda president Darius Sulnis said in a statement. The financial brokerage company Finasta posted LTL 6.1 million in interim losses, as against the year-earlier profit of LTL 3 million, due to continuing slump on the stock market.
Verslo Zinios

Tuesday, 29th of July

Ignalina Nuclear Power Plant will import electricity during repairs
Lithuania will cover the major part of electricity demand with imported power during the two-month repairs at Ignalina Nuclear Power Plant (INPP). Domestic power plants would cover some 43 percent of electricity demand, while the remaining part would be imported from Russia, Estonia and Scandinavia, Lietuvos Energija (Lithuanian Energy), the electricity transmission system operator, said in a statement. Lietuvos Elektrine (Lithuanian Power Plant, or LPP) will boost capacity utilization to become the main domestic source of electricity during the period. The first generator of the sole running unit of INPP will be switched off on Tuesday, July 29, while the whole unit will be stopped on August 2. INPP aims to switch the unit on September 30 and achieve full capacity on October 5.
Kauno Diena, Respublika, Verslo Zinios

FlyLAL accuses airBaltic
FlyLAL-Lithuanian Airlines, privately-owned Lithuania's carrier that has recently overcome Latvia's Airbaltic as the leading carrier at the Vilnius International Airport, accuses its Latvia's rival of unfair practice in Vilnius. Airbaltic had no right to demand any discounts or subsidies in Lithuania where it "only tried to grab market shares" from other carriers via alleged dumping of prices, FlyLAL said in a statement. "Airbaltic, in our view, has until now allegedly applied the dumping of prices in Lithuania since it used special discounts at Riga Airport, which have been declared illegal. Despite that Airbaltic is still using them," the statement quoted Gediminas Ziemelis, FlyLAL Group chairman, as saying. Latvia's carrier had not until now pursued any expansion strategy in Vilnius, which would be beneficial for Lithuania, Ziemelis claimed adding that Airbaltic only tried to grab market shares from other carriers since the financing received from Latvia's state enabled it to offer lower ticket prices in Lithuania.
Lietuvos Zinios, Lietuvos Rytas, Respublika

Vakaru Medienos Grupe posted figures
Vakaru Medienos Grupe (VMG), one of Lithuania's largest wood processing and furniture groups, posted LTL 211.99 million in sales for the first half of this year, up 43 percent year-on-year. Interim sales of Giriu Bizonas subsidiary soared by 63 percent, to LTL 121.432 million, making the largest single contribution into the growth of consolidated sales figure, VMG said in a statement. "Despite the process suspension in June, when the production of wood-chip boards at Giriu Bizonas was halted for three weeks for technologies adjustment, the results are strong. We have the most advanced wood-chip board production installations in Eastern Europe and work at maximum capacity," VMG CEO Viktoras Adomaitis said in a statement. Moreover, VMG found sources of cheaper raw stuffs in the neighboring countries and boosted the purchase of timber in Latvia and Belarus by 50 percent year-on-year, he added. Adomaitis said.

Monday, 28th of July

Ukio bank sold a business centre in Moscow
Lithuania's Ukio Bankas has sold a business center in Moscow, effectively closing a long-term non-core real estate project. The bank would channel the gain of LTL 27 million into the strengthening of liquidity reserves and expansion of crediting activities in Lithuania, Ukio Bankas said in a statement. "The profit on this project has met the bank's expectations. The timing for the sale of subsidiaries, which ran our Moscow investment project, was not too favorable on the property market, however, when taking this decision, the main criterion was the expansion of retail and commercial banking," the statement quoted Edita Karpaviciene, Ukio Bankas chairwoman, as saying.
Verslo Zinios

Lithuanian Power Plant burns new fuel produced by Mazeikiai Oil
Lithuania's state-controlled Lietuvos Elektrine (Lithuanian Power Plant, or LPP), started burning new fuel - emulsion produced by Mazeikiu Nafta (Mazeikiai Oil) - on Friday. "This is just the beginning, we only use it now to heat one boiler at partial capacity. The next trial is scheduled for July 30 and then, I hope, we will continue firing since Ignalina Nuclear Power Plant will be stopped for maintenance," Pranas Noreika, LPP CEO, said. LPP delivered the first 3,000 tons batch of emulsion produced by the sole Baltic oil refinery in mid-July. The plant intends to fire a total of 20,000 tons of emulsion, which is seen as a replacement for HFO and is much cheaper, in August and September. The plant and Mazeikiu Nafta signed an agreement on the supply of 20,000 tons of emulsion in June.
Verslo Zinios

Assets of collective investment undertakings totalled LTL 854.8 million
Aggregate assets of collective investment undertakings operating on Lithuania's market totaled LTL 854.8 million as of late June, down 32.2 percent versus the end-2007 figure of LTL 1.261 billion. The overall assets of collective investment undertakings declined for the third consecutive quarter in April-June, the Securities Commission said in a report. Meanwhile, the number of investors participating in those undertakings rose by 17.5 percent in six months, to 43,400 as of end-June. As of late June, about one-third of the assets was invested in the Baltic securities markets and another one-third in the markets of Western Europe. The markets of CIS states attracted about one-fourth of the assets.
Verslo Zinios

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