Observer "Lietuva"
Lithuania Business News: Archive 2003-

WEEK 37.2008

Saturday, 13th of September

Cereal purchase prices continue to fall
Cereal purchase prices in Lithuania continue to fall, according to data from the Agricultural Information and Rural Business Center. The average purchase price for wheat stood at LTL 507.3 per ton in early September, down 1.8 percent compared with a month ago and down 21.8 percent from a year earlier. The average price for rye fell by 19 percent month-on-month and was down by 31 percent in year-on-year terms.

Head of Rimi leaves
Paulo Peereboom, the CEO of Scandinavian-owned Rimi Lietuva, one of the largest grocery chains in Lithuania, is leaving the company to join a retail chain in Norway.
Peereboom has accepted an offer from ICA, Rimi Lietuva's shareholder, to become the commercial director of a Norwegian retail chain, the Lithuanian company said in a press release on Friday. "This is a new step in my career and, at the same time, a serious challenge," said Peereboom, who will continue to run Rimi Lietuva until a new CEO is appointed. Peereboom started working in Lithuania in early 2006. He previously worked as the supply chain and logistics director at Rimi Baltic.

FlyLAL to cooperate with Virgin Atlantic
Lithuania's flagship carrier FlyLAL-Lithuanian Airlines has signed a cooperation deal on connecting flights with UK's Virgin Atlantic. Similar agreements will be signed with Scandinavian Airlines (SAS) and Air Astana in the nearest time. "The agreement with Virgin Atlantic is a result of long negotiations. A possibility to offer convenient links and attractive price means more convenient and cost saving trips all across the world. Lithuania's travellers should be interested in flights from Vilnius to Las Vegas, Los Angeles, Miami, New York, Boston, Havana, Chicago, etc.," Vytautas Kaikaris, FlyLAL-Lithuanian Airlines CEO, said in a statement. FlyLAL currently offers connecting flights with 21 companies.

Friday, 12th of September

Lithuania is 28th in the world
Lithuania and the other two Baltic states are among the top 30 countries in the world in terms of the overall regulatory ease of doing business. Lithuania is ranked 28th out of 181 countries reviewed the Doing Business 2009 report by the World Bank, unchanged from last year's position. Estonia has slipped four notches in the global ranking, to number 22, but is still the highest-ranked country among the three Baltic States. Latvia is placed at number 29, three notches lower than a year ago. The World Bank noted in the report that Lithuania's authorities had made it easier to register property. Latvia's major reforms were also in the property registration area. Also, the country's new insolvency law made it possible for the first time for financially-troubled companies to continue operating by pursuing reorganization. The reform also tightened the qualification standards for bankruptcy administrators.
Verslo Zinios, Respublika, Lietuvos Rytas

Seven Lithuania companies made it to the Top 500 raking
Seven Lithuanian companies, including Mazeikiu Nafta (Mazeikiai Oil), Maxima, Palink and Lukoil Baltija, have made it into the Top 500 ranking of Central European companies, the audit and consulting company Deloitte has said in a report.
Mazeikiu Nafta, which is controlled by Poland's PKN Orlen, is the highest-placed Lithuanian company on the list, in 36th position, with sales revenue of 8.8 billion euros in 2007. The Lithuanian oil refining and transportation company ranked 15th a year ago. Mazeikiu Nafta's owner, PKN Orlen, remained at the top of the list with 2007 revenue of 16.9 billion euros. Maxima, the largest retail chain in the Baltics, ranks 62nd and Lukoil Baltija, Lithuania's leading oil product retailer, is 315th. Palink, Lithuania's second biggest grocery chain, ranks 344th and Senukai, the country's largest chain of building supplies and do-it-yourself goods, is 440th.
Kauno Diena, Lietuvos Rytas

Japan offers help
Japan's Mitsubishi Heavy Industries has offered to supply its reactors for new nuclear power plant being planned in Lithuania. The representatives of the corporation and nuclear energy department of Lietuvos Energija (Lithuanian Energy), Lithuania's power utility, discussed the options of cooperation at a meeting in Vilnius late in August, Visagino Atomine Elektrine (Visaginas Nuclear Power Plant,or VNPP), a subsidiary of national investor company Leo LT, said in a statement. The meeting with potential reactor suppliers was the first after the establishment of VNPP, Giedre Krinicina, a PR expert of Lietuvos Energija's nuclear energy department, said. No other meetings were scheduled in the nearest time, she added.
Lietuvos Rytas

Thursday, 11th of September

Ukio Bank posts net profit
Lithuania's Ukio Bankas said on Wednesday that its net profit for the first eight months of this year rose by 39.9 percent from a year earlier to LTL 85.8 million. "The growing number of clients, as well as a stable and efficient lending policy, added to the bank's success," Ukio Bankas Chairwoman Edita Karpaviciene said in a press release. Ukio Bankas ended the first eight months of 2007 with a net profit of LTL 61.3 million. The bank said earlier that it was projecting an annual net profit of LTL 91.5 million for 2008, up from 82.724 million in 2007. However, it is likely to exceed this profit estimate following a real estate sale in Moscow.
Verslo Zinios, Respublika

420 companies suffer bankruptcies
A total of 420 companies in Lithuania were declared bankrupt in the first half of this year, one-third more than in the same period last year, the Economy Ministry has said in a report. The number of bankruptcies is above the half-year average of around 352 for 2001 through 2008, according to the ministry's first-half Economic Overview report. The average number of bankruptcies per month in the first half of this year was 70, compared with the monthly average of roughly 59 for 2001 through 2008, it said. The largest numbers of bankruptcies this year were in trade (33.6 percent) and manufacturing (30 percent).
Verslo Zinios

Group of SEB bank provides a loan for the development of wind power park
The Group of SEB bank, the largest Lithuania's commercial bank, has extended a LTL 221 million loan for the development of wind power park of Achema Group, the concern controlled by industrial magnate Bronislovas Lubys. The project would be financed by the group's leasing arm SEB Lizingas, SEB said in a statement. The second stage of development of the wind power park in the district of Kretinga, Western Lithuania, which would see the capacity of the park growing to 50 MW, from 16 MW, will be implemented by Renerga, a company controlled by Achema Group. "With wind turbines switched on, we plan to generate some 90 million kWh of electricity in 2011," Bronislovas Lubys said.
Verslo Zinios, Lietuvos Zinios

Wednesday, 10th of September

More working permits for foreigners
Amid continued shortage of skilled labor in Lithuania, the country's authorities issued almost twice as many work permits to foreigners in the first half of this year compared with the same period last year, the Economy Ministry said in its latest economic overview. The Lithuanian Labor Exchange granted 4,421 work permits to foreign nationals during the six-month period, up almost twofold year-on-year. Foreign workers came to Lithuania from 24 countries, most of them - from Belarus (30 percent), Ukraine (24 percent), Turkey (17 percent), Moldova (8 percent), China (6 percent), Russia (3.8 percent) and Georgia (2.9 percent). Some 36 percent of foreigners were employed in the construction sector, 36 percent in the services sector and 28 percent in the manufacturing sector.
Verslo Zinios

Export grows in Lithuania
Lithuania's exports grew by 33.8 percent in the first seven months of this year from a year earlier to LTL 32.8 billion and its imports rose by 24.6 percent to LTL 43.6 billion, the Statistics Department reported on Tuesday. The country's foreign trade deficit widened by 3.2 percent over the reporting period to LTL 10.8 billion, according to preliminary data based on customs declarations and Intrastat reports. In July compared with June, exports rose by 2.8 percent and imports were up 1.7 percent. Year-on-year, the growth rates were 35.2 percent and 22.7 percent, respectively. Russia remained Lithuania's biggest export partner in January through July, accounting for 15.1 percent of all exports, followed by Latvia with 11.2 percent, Germany with 7.3 percent and Poland with 6 percent.
Verslo Zinios, Lietuvos Rytas, Respublika

Financial brokerage companies post losses
Lithuania-based financial bro
Color kerage companies posted LTL 18.5 million in combined losses for the first half of this year, reversing the year-earlier net profit of LTL 12.2 million, the Securities Commission reported on Tuesday. The aggregate losses of investment fund and investment portfolio management companies made up LTL 0.1 million in the reporting period, down from LTL 20 million net profit in January-June 2007. Overall assets of financial brokerage companies plunged by 47.1 percent, year-on-year, to LTL 116.6 million as of late June, while the combined assets of management companies rose by 9.8 percent, to LTL 70.6 million.
Verslo Zinios

Tuesday, 9th of September

Alita invests into heat and power plant
Lithuania's largest alcohol production and distribution group Alita, which is owned by its management team, is set to invest in building a combined heat and power (CHP) plant. It is planned that the CHP plant will produce electricity for Alita's beverage factory in Alytus, in southern Lithuania. It could also sell any available surplus electrical energy to the national transmission grid operator Lietuvos Energija (Lithuanian Energy). Alita has invited bids for the construction of the planned CHP plant, which it expects to be completed in 2008 to 2010. The company hopes to receive financial support from the EU to help it build the power plant. It has not disclosed the value of the project. "We have an idea of how to use resources as efficiently as possible. We plan that an electricity generator will be installed within the factory grounds and will supply the company with electrical energy," Alita CEO Vytautas Junevicius said.
Kauno Diena, Respublika

Leo LT submits long term operating strategy
Lithuania's national electricity company Leo LT on Monday submitted its long-term operating strategy to its shareholders -- the Economy Ministry and NDX Energija, a firm controlled by the ten owners of Vilniaus Prekyba, officials confirmed. Leo LT's supervisory board earlier this month approved the strategy in principle. Certain revisions have been made to the document taking into consideration comments from the supervisory board. Neither Rymantas Juozaitis, the CEO of Leo LT, nor Julius Niedvaras, the chairman of the supervisory council, would comment on the document on Monday. Ignas Staskevicius, the CEO of NDX Energija and a member of the supervisory board at Leo LT, did not comment on it either, but said that the company's management board would have to implement the strategy, or it would be replaced. The CEO of NDX Energija said that they had agreed with the Economy Ministry to hold a shareholder meeting to discuss the strategy. However, he did not say when this meeting would take place.
Lietuvos Rytas, Respublika, Verslo Zinios

Affect of economic slow down for the residents
With economic growth slowing down, more than a half of Lithuania's population (51 pct) had to reduce consumption over last twelve months, 36 percent forwent the purchase of some necessities while 15 percent only purchased primary commodities, the latest poll commissioned by Hansabankas revealed. Meanwhile, about one-tenth of population boosted the consumption in the reporting period, the poll conducted by research company Spinter Tyrimai showed. "Obviously, a surge in the prices of food, utilities and transport undermines the purchasing power of consumers and leads to changes in their daily consumption habits," Tomas Andrejauskas, head of Financial Markets Service at Hansabankas, said in a statement. According to the poll data, Lithuania's consumers sounded rather pessimistic when asked to evaluate the financial outlook of their households. Some 48.2 percent of the polled did not expect to get any free money they could use for making savings or investments in coming three years. About 18 percent projected the amount of their free funds to decline in future.
Respublika, Verslo Zinios

Monday, 8th of September

Offer to buy City Service shares
Orion Securities has issued a Buy recommendation on shares in Lithuania's property maintenance company City Service with a target price of LTL 10.7 per share. Analysts at the Norwegian-owned Lithuanian financial brokerage firm said in a report that City Service's second-quarter results were slightly above their expectations. "The company successfully expanded its administered area, and it seems that long-awaited acquisitions in Russia will be started soon," Orion said. City Service has reported LTL 4.732 million in consolidated net profits for the first half of this year, up 2.2 percent from LTL 4.622 million a year earlier. Consolidated revenue jumped by 62.4 percent year-on-year to LTL 114.1 million.
Verslo Zinios

Rokiskis Cheese posts figures
Rokiskio Suris (Rokiskis Cheese), one of the biggest dairy producers in Lithuania, posted LTL 447.301 million in consolidated sales for the first eight months of this year, down 0.5 percent year-on-year. In August alone, the consolidated sales declined by 13.5 percent, year-on-year, to LTL 66.94 million, the group said in a statement to the Vilnius Stock Exchange (VSE). The group posted LTL 15.55 million in consolidated losses for the first half of this year, reversing the year-earlier net profit of LTL 13.201 million. Consolidated interim sales, according to revised estimations, totaled LTL 316.842 million, up 1.2 percent year-on-year.
Verslo Zinios, Respublika

Snaige changes its forecasts
Snaige, the only refrigerator manufacturer in the Baltics, has reversed its full-year LTL 4.6 million consolidated profit forecast to a loss of LTL 15 million. Earlier consolidated sales forecast of LTL 437.8 million was cut by 17.9 percent, to LTL 359 million. The losses would result on lower sales, growing prices of raw materials and higher loan costs, the company said in a statement. The sales would be lower than projected before due to a decline in purchasing power on some strategic sales markets of the company, Snaige's CEO Gediminas Ceika said.

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