Observer "Lietuva"

Lithuania Business News: Archive 2003-

WEEK 40.2008

Saturday, 4th of October

Bad ratings for Lithuania
Fitch Ratings, the international rating agency, has downgraded the long-term foreign and local currency Issuer Default ratings (IDRs) of Estonia, Latvia and Lithuania by one notch. The Outlooks remain Negative. Lithuania's long-term foreign currency Issuer Default Rating (IDR) was downgraded to A- (A minus), from A, while the long-term local currency IDR was cut to A, from A+. Short-term foreign currency IDR was affirmed at F1, the agency said in a statement. "The downgrade of the Baltic states reflects the risk that the deterioration in the European economic and financial environment will impose a more costly macroeconomic adjustment in the Baltic countries, given their large bank-financed current account deficits," said Edward Parker, Head of Emerging Europe sovereigns at Fitch. Fitch Ratings has downgraded Lithuania's credit ratings for the first time in twelve years. Last year the agency lowered the country's outlook. "Lithuania's long-term foreign currency IDR has been downgraded to A-, from A. Yet, it remains at higher investment level, thus the government securities have their place in long-term investment portfolios managed by domestic and foreign investors," the Finance Ministry said in comments.
Lietuvos Rytas, Kauno Diena

Forecasts for Lithuanian economy
Average annual inflation will exceed 10 percent in Lithuania in 2008-2010 as a result of looming increase in electricity prices and excise rates, the analysts of Danske Bank, the leading Scandinavian and Western European bank, forecast. In Estonia, the annual inflation will drop below 10 percent threshold in 2009, while Latvia could only expect lower inflation in 2010. The average annual inflation in Lithuania will reach 11.8 percent this year, 10.4 percent in 2009 and 10.1 percent in 2010, the bank said in its latest CEE overview. As of late July, the bank's analysts projected that the average annual inflation would total 11.4 percent in Lithuania this year and would drop to some 8-9 percent in 2009.

AirBaltic cancels flights
Latvian airline Airbaltic will cancel its flights from Vilnius to Hamburg and Oslo from October 25. Nevertheless, the daily newspaper Lietuvos Zinios cited the company's representatives as denying reports that the decisions were due to the threats made by Latvian Transport Minister Ainars Slesers who has said that Airbaltic would terminate the majority of flights from the Vilnius International Airport. According to the daily, Airbaltic has recently notified clients who have purchased electronic tickets and planned trips in advance about the cancellation of flights. "The route (to Hamburg) is shifted from Vilnius to Riga due to the more favourable economic situation in the neighbouring country. Due to the same reason airplanes will not fly from Vilnius to Oslo in the winter season," said the head of Airbaltic Lithuanian unit, Tadas Vizgirda. On September 25, a Vilnius court satisfied a request of Lithuania's flagship carrier FlyLAL-Lithuanian Airlines and seized LTL 199.83 million worth of assets of Latvia's air carrier Airbaltic and Riga Airport.
Lietuvos Zinios

Friday, 3rd of October

Leo LT fails to reach a final agreement with is partners
Lithuania's national energy company Leo LT has so far failed to reach a final agreement with its partners on their participation in the capital of Visagino Atomine Elektrine (Visaginas Nuclear Power Plant), a company set up to help prepare for the construction of a new nuclear power plant. Rymantas Juozaitis, the CEO of Leo LT, told reporters on Thursday that the planned 3,400-megawatt plant would have enough capacity to meet the needs of all partners. Tomasz Zadroga, the CEO of Poland's Polska Grupa Energetyczna, said that Poland wanted no less than 1,000 megawatts. The heads of Latvian and Estonian companies said that they wanted 500 MW each. Leo LT has said earlier that it will keep 1,300 MW of the new plant's capacity for its own needs.
Lietuvos Rytas, Respublika, Verslo Zinios

DnB Nord Bank plans selling bonds
DnB Nord Bankas, Lithuania's third-biggest bank by assets, plans to sell another EUR 300 million worth of bonds to the public. The Lithuanian Securities Commission on Thursday approved the base prospectus for the bank's bond program, the authority said. DnB Nord Bankas is owned by the Danish-based Bank DnB Nord, a joint venture between Norway's DnB Nord and Germany's Nord/LB. The Lithuanian bank's shares are quoted on the Vilnius Stock Exchange.
Verslo Zinios

Pieno Zvaigzde presents figures
Pieno Zvaigzdes, Lithuania's largest dairy company, earned a profit of around LTL 6 million on the sale of non-core real estate in the third quarter of this year and will include this gain into its performance results for the first nine months of the year. Pieno Zvaigzdes CFO Audrius Statulevicius said at an investment fair, Vilnius Invest 2008, on Thursday that the company made a net profit of around LTL 9 million in the third quarter, including a 6-million-litas gain from the sale of real estate. The dairy producer earlier this week reported preliminary sales of LTL 505 million for the first nine months of this year, up 0.7 percent year-on-year. The company expects to post a profit for January-September after reporting a loss of LTL 0.8 million for the first eight months of the year.
Verslo Zinios

Thursday, 2nd of October

Car market expands
Lithuania's new car market expanded by 14.4 percent, year-on-year, with 20,870 new cars registered in January-September, the market researcher Autotyrimai reported.
In September alone, new car registrations fell by 15.3 percent, year-on-year, to 1,690. Germany's Volkswagen restored the lead on the Lithuanian new car market in September with 250 cars registered last month. Toyota was the second with 206 new cars registered and Skoda was the third with 149 new cars sold during the month. BMW led the premium segment with 68 new cars registered.
Lietuvos Rytas

Lithuania Railways and Mazeikiu Nafta sign an interim agreement
Lithuania's state-run railway operator Lietuvos Gelezinkeliai (Lithuanian Railways) and Mazeikiu Nafta (Mazeikiai Oil), the sole Baltic oil refinery controlled by Poland's PKN Orlen, have signed an interim agreement on the transportation of petroleum products by rail. "The interim agreement will reduce pressure between the companies and will stay in effect until the settlement of disputable questions. Those arose due to different interpretation of provisions of 1999 agreement related with the rates applied," Mazeikiu Nafta's spokesman Jacek Komar said. "We failed to strike a compromise concerning September. According to our estimations, last month the debt of Mazeikiu Nafta, which did not pay in line with our base rates, exceeded LTL 25 million," Vilius Nikitinas, the head of the Law Department at Lietuvos Gelezinkeliai, said. The agreement stipulates that the parties will hold talks and will seek to sign a permanent cooperation agreement by November 21. The row between the companies broke out in September after the railway operator unilaterally cancelled a long-term agreement with Mazeikiu Nafta, saying that the refinery had been applying lower-than-agreed transport tariffs since June.
Lietuvos Rytas, Respublika, Verslo Zinios

Apranga Group posts figures
Apranga group, the operator of the largest Baltic clothes retail chain controlled by MG Baltic concern, posted LTL 7.8 million in unaudited consolidated pre-tax profit for the first eight months of this year, down 44 percent versus the year-earlier. Nine-month sales rose by 22.5 percent, year-on-year, to LTL 375.4 million (VAT inclusive), the group also said in a statement to the Vilnius Stock Exchange (VSE). In September alone the sales grew by 10.2 percent, to LTL 50.6 million. Apranga was 52.4 percent controlled by MG Baltic as of late June.

Wednesday, 1st of October

Druzhba pipeline is Lithuania business
The offshoot of Russia's Druzhba pipeline to Lithuania, which was shut down more than two years ago, could be reopened if Lithuania contributed to its repairs financially, Russian Ambassador to Lithuania Vladimir Chkhikvadze believes. The issue of the pipeline was far less political than attempted to show, he claimed. "The Druzhba pipeline - of course, it's business, pure business. If Lithuania is ready today to contribute several tens of millions of dollars for the repairs of the pipeline, it could be reopened," Chkhikvadze told the reporters after the meeting with parliamentary Foreign Affairs Committee on Tuesday. Responding to the comment by the committee chairman Justinas Karosas that Lithuania had offered such an option, i.e. its contribution to the repair of Druzhba, Russia's ambassador said: "I think today it's business." "If Lithuania's businessmen come with specific proposals, ready to invest, we could have a dialogue. I do not want to say that a positive decision will be taken. But this question may be considered - why not? However, the pipeline has more than 4,000 defects today, so people should think whether it is worthwhile to deal with it or not," the diplomat said.
Verslo Zinios, Kauno Diena

Lithuanian’s GDP expands
Lithuania's Gross Domestic Product (GDP) expanded by 6.1 percent in the first half of this year compared with the year-earlier, the country's Statistics Department reported on Tuesday. Revised growth rate was the same as estimated preliminarily. According to revised figures, the country's GDP rose by 5.2 percent in the second quarter, year-on-year. Earlier the department said the economy expanded by 5.3 percent in April-June. Revision was made considering more comprehensive data for the second quarter and evaluating added value based on a more detailed list of types of economic activities.

Lithuania’s economic growth is getting slower
Lithuania's economic growth, as forecast, is getting slower, which is evidenced by the latest GDP figures released by the country's Statistics Department earlier on Tuesday, yet the economic development is getting more balanced, analysts claim. "The importance of domestic consumption, which had the biggest impact on the growth of GDP in last three or four years, is declining, whereas foreign trade is playing an increasingly large role. Exports are growing faster than imports today," Vilija Tauraite, chief analyst with SEB Bank, said. Considering the continuing decline in domestic consumption and slowdown of economic growth, the impact of exports on economic development would be even larger in the second half of the year, she projected.
Lietuvos Rytas

Tuesday, 30th of September

Lithuanian central government debt narrows
The Lithuanian central government sector's debt totalled LTL 14.874 at the end of August, accounting for 13.5 percent of this year's projected GDP, the Finance Ministry reported on Monday. The debt narrowed by LTL 215.2 million last month. Domestic debt shrank by LTL 162.9 million over the month, to LTL 4.053 billion or 27.2 percent of the total debt figure, while foreign debt declined by LTL 52.3 million, to LTL 10.821 billion or 72.8 percent of the total. The central government sector owed 10.507 billion to foreign banks and other financial institutions, and LTL 314.2 million to international organizations.
Verslo Zinios, Respublika

Cooperation between Lithuania and South Korean company
Lithuanian Radio and Television Center (LRTC) and South Korean electronics giant Samsung Electronics will plough more than LTL 100 million into the building of public wireless network based on WiMAX technology during a period of three years. On Monday LRTC and Samsung Electronics signed an agreement, under which the South Korean company would supply the equipment required for the project. Samsung Electronics will install 530 base stations, supply antennas, provide warranty and post-warranty maintenance in Lithuania. Back in 2007, Balticum TV, LRTC, and a consortium of telecommunication companies Nelte and Norby Networks won the licenses for building and operating public wireless networks based on WiMAX or other broadband technologies. Balticum TV built the first WiMAX base station in Lithuania in March.
Verslo Zinios

DnB Nord bank intends to increase its share capital
DnB Nord Bankas, Lithuania's third-biggest bank by assets, is set to increase its share capital to LTL 622.104 million from the current LTL 590.999 million through additional contributions by shareholders. DnB Nord's shareholders on Monday gave the go-ahead for a new 31.105-million-litas share issue, a minority shareholder said. The issue price is set at LTL 260 per share, compared with the share's nominal value of LTL 115. The bank will raise a total of LTL 70.325 million if the share offering is fully subscribed. DnB Nord earlier this year raised LTL 146.266 million through a new share issue, worth LTL 45.46 million at par; to finance its growth plans. Also this year, the bank increased its share capital by another LTL 181.846 million from its own resources.
Verslo Zinios

Monday, 29th of September

Projections for Lithuania
Lithuania's draft Lisbon Strategy implementation plan for 2008-2010 projects that in 2010 the country's GDP growth will reach 5.2 percent and the average annual inflation rate will be 3.6 percent. However, the authorities acknowledge that due to the planned closure of the Ignalina Nuclear Power Plant in late 2009, the GDP growth projection could be lowered by several percent and the inflation estimate could be revised upwards. "If the risk of a sudden slowdown in economic growth becomes reality, the medium-term fiscal goals may be revised," the document, worked out by the Economy Ministry, reads. The Cabinet is expected to discuss the draft plan next Wednesday.
Verslo Zinios

Grigiskes reports figures
Grigiskes, the largest manufacturer of hardboard and toilet paper in Lithuania, reported on Friday consolidated sales of LTL 98.6 million for the first eight months of this year, a rise of 6.8 percent from a year earlier. The consolidated result also includes that of Grigiskes' subsidiary, Baltwood. The group is projecting annual sales of LTL 160 million this year. It posted LTL 6.5 million in consolidated pre-tax profits last year, almost 10 percent lower compared with 2006. Annual sales increased by 20 percent to LTL 144 million. The paper manufacturer is based in Grigiskes, a suburb of Vilnius.
Verslo Zinios

Possible agreement between Lithuanian railways and Mazeikiu Nafta
Lithuanian Railways and Mazeikiu Nafta (Mazeikiai Oil) may sign the temporary agreement about the oil products shipment via railways today. Vilius Nikitinas, head of Law Department in Lithuanian Railways, has confirmed this information, while Jacek Komar, press representative of Mazeikiu Nafta, has also noted that the agreement might be signed on September 29. It would be the first compromise between the two companies, after the Lithuanian railways cancelled the previous agreement with Mazeikiu Nafta at the beginning of September and required Mazeikiu Nafta to cover its debts worth more than LTL 40 million. Verslo Zinios, Kauno Diena

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