Observer "Lietuva"
Lithuania Business News: Archive 2003-

WEEK 36.2008

Saturday, 6th of September

Freezing of highest wages
Freezing of highest wages in Lithuania's public sector will be envisaged in the 2009 budget bill, which should be submitted to the parliament before the elections due in October. "Those who earn the highest wages in the public sector should have their wages frozen,'' Finance Minister Rimantas Sadzius said after the meeting with his Baltic counterparts in Trakai on Friday. Those who earn low wages would not suffer, he added. Three Baltic countries applied different approaches to the raising of wages in the public sector, Sadzius said. "Yesterday Latvia's Cabinet of Ministers ruled to freeze the wages fund, which will remain at the last year's level," Latvia's Finance Minister Atis Slakteris said at a news conference. Estonia would not raise the wages of public officers, either. More than several tens of thousands of state employees would be affected in the wage freeze, Sadzius said.
Respublika, Lietuvos Zinios, Lietuvos Rytas

Unemployment level falls
Lithuania's unemployment rate edged down by 0.1 percentage point versus July, to 4.7 percent in August, the Labor Exchange reported on Friday. Slightly more than 100,000 jobseekers were registered with the exchange at the end of August, the statement said. The number of jobless exceeded 72,200 as of late August, up by one-fifth versus the year-earlier figure. More than 148,000 jobseekers were registered with the Labor Exchange in the first eight months of this year, up 17.3 percent year-on-year.
Respublika, Lietuvos Zinios, Lietuvos Rytas

Producer prices grow up
Lithuania's producer prices edged up by 0.1 percent in August versus July and were up 25.3 percent compared with a year ago, the Statistics Department reported on Friday.Excluding the impact of oil product price changes, producer prices rose by 0.2 percent on a monthly basis and were up 19.3 percent year-on-year. Month-on-month, producer prices in the mining and quarrying sector fell by 6.6 percent and prices in the manufacturing sector we down 0.7 percent. Electricity, gas and water supply prices jumped by 6.8 percent over the month. Prices of products sold on the domestic market rose by 1.9 percent in August versus July and were up 20.4 percent year-on-year. Excluding oil products, the growth rates were 2.9 percent and 17.1 percent, respectively.

Friday, 5th of September

Minimum monthly wage will increase
An increase in the minimum monthly wage from the current LTL 800 to LTL 1,000 from next January would require around LTL 250 million in additional budget funds. On the other hand, the state would raise an estimated LTL 511 million in extra income tax revenue. Some LTL 250 million would be needed to increase the pay for 17,000 employees of budget-funded institutions who currently earn minimum salaries, Algirdas Sysas, the chairman of the parliament's Social Affairs and Labor Committee, said, citing data from the Finance Ministry. Another 45,000 minimum wage earners are employed in the private sector.
Verslo Zinios, Lietuvos Rytas

New bank
Finasta, a company owned by the investment group Invalda, has launched operations as a specialized investment bank on Thursday. The bank claims it would not rival universal banks and would render complex investment, assets management and corporate finance services. Finasta, which has the authorized capital of LTL 20 million, is the first 100-percent locally-owned bank to open in Lithuania since 1998. Finasta mulls expansion in Lithuania and Latvia, and would focus investments in Central and Eastern Europe (CEE). "Private banking will be one of the main areas of our operations, and resistance to market moods will be one of the main principles of our work. All decisions shall be based on fundamental analysis," Finasta CEO Dalius Kaziunas said during a news conference on Thursday.
Verslo Zinios, Respublika, Lietuvos Rytas

Forecasts for Alita
Beogradska Industrija Piva (BIP), a Serbian brewery controlled by Lithuania's spirits group Alita, mulls a shift of manufacturing facilities and sees its sales reaching some EUR 100 million in several years' time. BIP shareholders aim to move the production in Serbia from Belgrade to a modern facility in Krniaca. In 2012-2013 the company's revenues on beer should reach some EUR 75-100 million. BIP expects its share on the beer market to grow by some 10-15 percent, the company said in a statement to the Belgrade Stock Exchange. Any decisions on BIP reorganization would require the approval of small shareholders, which earlier blocked the split and planned sale of malt business.
Verslo Zinios

Thursday, 4th of September

Ignalina Nuclear Power Plant wishes to boost the sale price of its electricity
Ignalina Nuclear Power Plant (INPP) has applied to the National Control Commission for Prices and Energy for an authorization to boost the sale price of its electricity by 0.45 cents, to 7.03 cents (2,04 euro cents) per 1 kWh from 2009, from current 6.58 cents per 1 kWh. "The main reason for this move is a surge in fuel prices and increase in variable costs. Fuel prices soared by 80 percent over a year." INPP CFO Eugenijus Grumskas said. New electricity price, if approved by the panel, would come into effect on January 1, 2009. The sole operating unit of INPP was closed for scheduled repairs early in August. "The repairs are under way as scheduled. The power plant should reach full capacity of 1,300 MW on October 5," Grumskas said.
Verslo Zinios, Lietuvos Rytas

Mazeikiai Oil gets a temporary 30 percent discount
Mazeikiu Nafta (Mazeikiai Oil), Lithuania's oil refinery controlled by Poland's concern PKN Orlen, will get a temporary some 30 percent discount it applied for on the railway tariffs levied by Lietuvos Gelezinkeliai (Lithuanian Railways) on the company unilaterally from September. "A temporary agreement, the draft of which we forwarded to Mazeikiu Nafta on Wednesday, should be in effect until we sign a new contract. We agreed in that document that Mazeikiu Nafta should pay 30 percent less compared with the base rates for the conveyance of petroleum products, i.e. just as asked by the head of the oil company," Stasys Dailydka, Lietuvos Gelezinkeliai CEO, said. In June Mazeikiu Nafta further reduced the railway rate, which had been in effect for the company since 1999, when the oil company was purchased by US Williams International.
Verslo Zinios, Lietuvos Rytas

Profit of insurance companies
Lithuanian-registered insurance companies posted LTL 56.2 million in aggregate net profits for the first half of this year, a 15.8 percent decline from a year earlier, the Insurance Supervisory Commission (ISC) reported on Wednesday. Despite an improvement in investment performance in the second quarter compared with the first quarter, the sector's first-half profits from investment activities fell sharply in year-on-year terms due to a less favorable situation in the world's financial markets, the supervisory authority said. Year-on-year, life insurers' net profits for the first six months dropped by 20.4 percent to LTL 15.2 million and non-life insurers' net profits were down 14 percent to LTL 41.1 million, it said.
Lietuvos Rytas

Wednesday, 3rd of September

ZIA Valda Real Estate changed its name
ZIA Valda Real Estate, a real estate company owned by the Lithuanian investment group ZIA Valda, has changed its name to Optimal Real Estate Management (OREM) and is poised for expansion to foreign markets. OREM Holding, an investment management company established this year, will coordinate the creation and operations of OREM's network in foreign countries. The total volume of transactions though the network is expected to reach a billion euros in 2010, OREM said in a press release on Tuesday. OREM Holding's immediate plans call for expansion into central and southeastern Europe, as well as the Baltic countries. Antanas Baliukevicius, the chairman of the management board at OREM Holding, said in a news conference on Tuesday that the company was interested in expanding into Russia, Ukraine, Bulgaria, Serbia and Poland.
Verslo Zinios, Respublika

Leo LT investments
Lithuania's national electricity company Leo LT currently has LTL 573.3 million in its strategic project financing fund, of which LTL 171.1 million has been invested in time deposits and LTL 402.2 million in bonds, the company said on Tuesday. "We are accumulating funds for the financing of projects for inter-system connections with Poland and Sweden and for a new nuclear power plant," Ramunas Biciulaitis, the CFO of Leo LT, said. "We choose the most effective ways of investment, but our number-one criterion is security. We do not intend to invest the accumulated funds in stock markets. At present, time deposits and bonds are our main investment instruments," he said.
Lietuvos Zinios, Respublika,Verslo Zinios

Societe General acquires General Financing
France's banking group Societe Generale has acquired General Financing, Lithuania's consumer credit provider controlled by the investment company Avestis and two private investors Aurelijus Rusteika and Giedrius Tomas Jarmalavicius. General Financing, which is active on the market with the brand Kreditas 123, has been purchased by Societe Generale Consumer Finance, a unit of Societe Generale. "Our investment company usually buys existing businesses, yet this time we have chosen a different way," Rytis Jakaitis, Avestis board member, said in a statement. General Financing interested quite a few strategic buyers, and the shareholders of the company singled out the offer placed by Societe Generale as the most attractive one, Jakaitis said.
Lietuvos Rytas

Tuesday, 2nd of September

19,2 new motorcars were registered in Lithuania during first eight months
A total of 19,2 new motorcars were registered in Lithuania during the first eight months of this year, a rise of 18 percent on the same time last year, the Datacenter market research company reported on Monday. However, in August new car registrations slumped down by 31 percent year-on-year to 1,500 units. "This is the largest fall in Lithuania this year so far. There has not been such a decline since the Russian crisis in 1998," Datacenter said in a report. The number of cars registered for personal use in January through August increased by 24 percent to 16,890, but the number of cars for commercial use fell by 11 percent to 2,300 units.
Kauno Diena, Lietuvos Rytas

Vilnius International Airport services more passengers
Vilnius International Airport, the largest in Lithuania, serviced 1.439 million passengers during the first eight months of this year, up 29 percent year-on-year. "In August the airport serviced 224,400 passengers, up 25 percent compared with August 2007. This is an absolute record in the company's history," the press release said. The airport handled 27,200 flights in January-August, up 28 percent year-on-year.
Verslo Zinios, Respublika

Klasco posts figures
The group of Klaipedos Juru Kroviniu Kompanija (Klaipeda Stevedoring Company, or Klasco), the largest stevedoring company in the port of Klaipeda, posted LTL 11.96 million in consolidated net profit for the first half of this year, up 48 percent from the year-earlier figure of LTL 8.08 million. The net profit of Klasco company alone soared by 2.4 times, to LTL 11.51 million, from LTL 4.72 million in January-June 2007, Klasco said in its consolidated interim report. The revenues of the company alone increased by 26.1 percent, to LTL 76.36 million, while the consolidated revenues rose by 16.6 percent, to LTL 88.67 million in the reporting period.
Verslo Zinios

Monday, 1st of September

Apranga Group presents forecasts
Apranga group, the operator of the largest Baltic clothes retail chain controlled by MG Baltic concern, sees 2008 sales shrinking by some 10 percent compared with the forecasts published late in 2007, as a result of slowing growth of Baltic consumer goods market, in particular in Latvia and Estonia, and delays in the opening of Panorama mall in Vilnius. The company intends to review its 2008 sales and earnings forecasts early in November. Previously Apranga group projected the consolidated pre-tax profit of LTL 39.5 million on the sales of LTL 580 million for 2008.
Verslo Zinios

Ergo reports profit
Two Lithuanian insurance companies controlled by Germany's Ergo reported LTL 4.8 million in profit for the first half of this year, down 29.4 percent from the year-earlier figure of LTL 6.8 million. Interim turnover rose by 30 percent, to LTL 156.5 million, Ergo Lietuva said in a statement. Non-life insurer Ergo Lietuva wrote LTL 110.4 million in insurance premiums in six months, up 25 percent year-on-year. The amount of premiums written by life insurer Ergo Lietuva Gyvybes Draudimas grew by 48.8 percent, year-on-year, to LTL 46 million.
Verslo Zinios, Respublika

Snaige successfully sells new share issue
Snaige, the only refrigerator manufacturer in the Baltics, has successfully sold a new share issue with a nominal value of LTL 4 million, raising an additional LTL 10 million. "The successful placement of the shares shows that investors trust in Snaige's successful future," Karolis Rukas, the head of the corporate finance unit at the financial brokerage company Orion Securities, said. Snaige said that it would use the proceeds from the share issue to purchase new equipment and to develop new technologies, as well as for working capital purposes.

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