Observer "Lietuva"

Lithuania Business News: Archive 2003-

WEEK 42.2008

Saturday, 18th of October

VAT is expected to be smaller
Value added tax (VAT) is expected to account for the largest chunk - 37.3 percent of the national budget revenues (8.1 pct of GDP) in 2009, still the government assumes that the eventual amount may be smaller. Central government budget commitments related with companies and VAT refunds are seen growing considerably in 2009. The forecasts are based on larger-than-expected increase in VAT overpayment this year, the government has said in its 2009 draft budget submitted to the parliament. According to the data available to the State Tax Inspectorate, the total amount of VAT overpayment exceeded LTL 1 billion as of October 1. Moreover, the slowdown of VAT collection is expected to continue next year. In the first quarter the revenues on VAT rose by 27.7 percent, year-on-year, yet the growth slowed down to 18.9 percent in the second quarter and further down to 9.1 percent in July-September. Revenues on VAT are estimated to total LTL 9.298 billion in 2009. The estimations have been made based on the assumptions that end-consumption expenses will shrink by 2.1 percent nominally while the amount lost as a result of tax breaks will total LTL 537 million next year.
Lietuvos Zinios, Lietuvos Rytas

Negative predictions for Lithuania
Danske Bank, the leading Scandinavian and Western European bank, has mentioned Lithuania, Latvia and Estonia among 15 most economically unsafe countries worldwide. The economic situation of countries on the list is not safe if they are hit by financial troubles, the analysts of the bank claim. Lithuania's economy is slowing down, yet the country's gross domestic product (GDP) will grow faster compared with neighbouring Baltic countries, the bank says. Lithuania's property market has stalled and the housing prices may decline considerably following the trend in Estonia and Latvia. As concerns Europe, the list also includes Iceland, Ukraine, Turkey, Bulgaria and Hungary. The bank also mentioned Pakistan, Argentina, Venezuela, Kazakhstan, Indonesia, South Korea and South Africa among the most economically unsafe countries worldwide.
Respublika, Lietuvos Rytas, Kauno Diena

VST posts figures
VST, Lithuania's power grid operator controlled by the national energy company Leo LT, posted LTL 20.8 million in net profit for the first nine months of this year, halving the year-earlier figure of LTL 42.033 million. For the third quarter the company reported the losses of LTL 13.3 million due to the increase in electricity generation costs and operating inputs. Nine-month revenues totalled LTL 848.6 million, up 11.6 percent from the year-earlier figure of LTL 760.7 million.

Friday, 17th of October

Consumer prices should grow by 0.7 percent
Consumer prices should grow by 0.7 percent in Lithuania over October, the country's Statistics Department projects. The annual inflation, meanwhile, would hit 10.45 percent, and twelve-month inflation average should be 10.98 percent this month. In October the inflation would be mostly affected by the increase of housing services prices in the beginning of new heating season, Jurga Ruksenaite, chief expert at the department's methodology and quality division, said. "Moreover, the growth of clothes and footwear prices will continue as new collections appear in stores in October. We also foresee a slight increase in the prices of food and drinks. The growth of prices in the restaurant and hotel segments should continue," Ruksenaite said. The overall increase should be somewhat offset by a decline in prices in the transport group, she added.
Respublika, Lietuvos Rytas

Lifosa posts numbers
Lithuania's phosphate fertilizer manufacturer Lifosa posted LTL 449.45 million in unaudited net profit for the first nine months of this year, up 3.3 times year-on-year. Nine-month revenues soared 2.35 times, to LTL 1.509 billion. The company, which is quoted on the I-List of Vilnius Stock Exchange, linked fast growth of sales and earnings with high prices of diammonium phosphate, its main product, on the market. The Russian mineral fertilizer group Eurochem owns a 91.15 percent stake in Lifosa.
Respublika, Verslo Zinios

Competition Council punishes Maxima
Lithuania's Competition Council has slapped a LTL 100,000 fine on Maxima LT, the operator of the largest Lithuania's retail chain, for violations of the Law on Competition. In 2002-2006 Maxima LT failed to notify the watchdog about the expansion of its chain in due time and did not obtain the permissions required, the panel said. Maxima LT reported LTL 4.7 billion in sales for the first nine months of this year, up 28.4 percent year-on-year. The whole Maxima group raised nine-month sales by 29 percent, to LTL 7.3 billion. The company runs a chain of 230 stores in Lithuania.
Lietuvos Rytas, Kauno Diena

Thursday, 16th of October

Lithuanian are the biggest pessimists in the Baltics
The Lithuanians are the biggest pessimists in the Baltic countries hit by economic crisis. However, despite challenging economic environment, they still claim to see possibilities to invest, the latest consumer poll by the market researcher GfK CR Baltic has shown. When asked to assess the general domestic economic situation, the Lithuanians were the most sceptical among the respondents in all three Baltic countries with as much as 73 percent of the polled in Lithuania predicting the economic environment to get worse by 2009. In Estonia, the worsening of economic situation was anticipated by 49 percent of respondents, in Latvia - 58 percent. About 40 percent of the Lithuanians polled envisaged deterioration in their households' financial position in coming six-month period. In Latvia that rate was 36 percent, and in Estonia - 27 percent.
Kauno Diena

Maxima Group reports numbers
Maxima Group, the largest retailer in the Baltics, reported LTL 7.3 billion in sales in Lithuania, Latvia, Estonia and Bulgaria in the first nine months of this year, up 29 percent year-on-year. In the third quarter alone, the sales grew by 23.7 percent, year-on-year, to LTL 2.51 billion. Compared with the second quarter of this year, the sales shrank by 0.4 percent in July-September, the company said in a release. The sales of Maxima LT, the Lithuanian unit of the group, rose by 28.4 percent, year-on-year, to LTL 4.7 billion, in the nine-month period. Slower-than-usual growth of sales was not surprising since the weakening of consumption in the Baltic countries was foreknown; the statement quoted Gintaras Jasinskas, Maxima LT CEO, as saying. Moreover, similar to other business sector, the retail sector was affected by the general economic slowdown.
Verslo Zinios

European Commission may supervise the working out of Baltic energy links plan
The European Commission (EC) may supervise the working out of Baltic energy links plan, coordinate its implementation and extend additional financing for the purpose, EC President Jose Manuel Barroso proposed during the working dinner with Lithuania's Prime Minister Gediminas Kirkilas, government leaders from Latvia, Estonia, Poland, Finland and Denmark and Sweden's foreign minister on Tuesday. High-ranking officials also discussed the potential course of new plan's implementation and options for additional financing, the government press service said in a release. The working out and implementation of Baltic energy links plan would make Lithuanian-Polish and Lithuanian-Swedish power links the responsibility of the whole Europe, which would speed up the implementation of projects and improve their financing, Kirkilas said. Yet, Lithuania remains convinced that the period of 2010-2012 is critical since the country has no short-term measures to solve the problems of its energy security. Thus, Kirkilas reiterated Lithuania's position on the modification of deadline for the shutdown of Ignalina Nuclear Power Plant (INPP) and submitted Lithuania's proposals on energy security to EC President.
Respublika, Lietuvos Zinios, Lietuvos Rytas

Wednesday, 15th of October

Parliament okays a proposal to increase protection for deposits
Lithuania's parliament has okayed a proposal to increase the protection for deposits held at commercial banks for a period of one year. In line with legislative amendments, the bank deposit guarantee will be raised to 100,000 euros, effective until the end of October 2009. Currently full guarantee is provided for bank deposits of up to 22,000 euros in Lithuania. The total amount of retail deposits at Lithuania's commercial banks made up LTL 24.4 billion as of late August. Overall amount of deposits at Lithuania's commercial banks totals some LTL 44 billion, Finance Minister Rimantas Sadzius has said recently.
Kauno Diena, Lietuvos Rytas, Verslo Zinios, Lietuvos Zinios, Respublika

Topo Centras shuts down stores in Latvia
Topo Centras, the largest Lithuania's household appliance and electronics retail chain controlled by AG Group, has shut down almost 20 stores in Latvia amid economic slowdown. The outlets were shut down temporarily, Aurelijus Rusteika, the owner and CEO of AG Group, said. "We closed the stores in fall: in September and October. We hope we could reopen them soon," Rusteika said. He confirmed that Topo Centrs outlets in Latvia might be reopened in 2009 at the earliest. The turnover of Topo Centras in Latvia totals some LTL 30-50 million per year.
Lietuvos Rytas

Budget for social insurance fund approved
The Lithuanian government approved on Tuesday a draft budget for the state social insurance fund, Sodra, for 2009, with revenues and expenditures balanced at LTL 13.1 billion. As per draft, in 2009 the revenues of the fund should increase by 16.9 percent compared with the amount envisaged for 2008, while the expenditures will grow by 5 percent. The 2009 budget of the fund will be balanced with a reserve of LTL 779,000. The draft also needs the approval of the parliament. The revenues of the fund should grow next year largely as a result of anticipated 9.8 percent average increase in the wages of the insured.
Respublika, Lietuvos Rytas

Tuesday, 14th of October

Stumbras reports figures
Stumbras, Lithuania's largest spirits producer, reported LTL 109.41 million in sales for the first nine months of this year, up 1.3 percent versus the year-earlier figure of LTL 107.97 million. In September alone, the sales plunged by 20.2 percent, year-on-year, to LTL 12.01 million. Stumbras is projecting a pre-tax profit of around LTL 33.1 million for the full year 2008, down 19.5 percent from LTL 41.1 million last year. Full-year sales are seen reaching LTL 147.9 million, investments into the upgrade of production - some LTL 5 million.
Verslo Zinios

Siauliu Bank reports numbers
Siauliu Bankas, the fast growing Lithuania's commercial bank, reported LTL 17.416 million in unaudited net profit for the first nine months of this year, down 28 percent versus the year-earlier figure of LTL 24.203 million. Excluding the effects of the sale of Pajurio Alka subsidiary, which inflated the profit figure in the first half of 2007, the nine-month profit of the bank, rose by 11.4 percent. The bank, which is quoted on the Main List of Vilnius Stock Exchange (VSE), aims to raise net profit by 17 percent, to LTL 32 million this year.
Verslo Zinios, Respublika

National budget is projected to run deficit
Lithuania's national budget is projected to run a deficit of LTL 2.639 billion in 2009. Total revenues are to reach LTL 30.199 billion, including LTL 5.274 billion in the European Union (EU) funds. In 2008 the overall revenues are planned at LTL 29.407 billion. The national budget assignations will make up LTL 32.838 billion in 2009, up LTL 1.5 billion versus the expenditures planned for 2008, the Finance Ministry has said in a statement. The budget deficit will account for 2.3 percent of planned Gross Domestic Product (GDP) in 2009; the ministry said citing the 2009 draft budget to be submitted to the Cabinet on Tuesday. The revenues of the central government budget are planned to reach LTL 25.533 billion, including LTL 5.274 billion in the EU funds, next year. Projected assignations have been put at LTL 28.172 billion. Compared with 2008, the national budget revenues will grow by 2.7 percent next year, while the revenues of the central government budget will shrink by 0.15 percent.
Verslo Zinios, Lietuvos Rytas

Monday, 13th of October

Ratings for SEB and DnB Nord banks
The international rating agency Fitch Ratings has affirmed the credit ratings and outlooks earlier assigned to Lithuania's commercial banks SEB and DnB Nord.
Both banks have been affirmed at Long-term Issuer Default Rating (IDR) 'A' with Stable Outlook. The long-term IDR of both banks now exceeds Lithuania's sovereign long-term foreign currency IDR, which was downgraded to 'A-' (A minus), from 'A' last week. The ratings of Lithuania's commercial banks were assessed in concert with the ratings of their parent Scandinavian banks. The agency assessed DnB Nor, SEB and Swedbank, which are the most active in the Baltic region. The ratings and outlooks of DnB Nord and SEB remained unchanged, while the Outlook of Swedbank's long-term IDR 'A+' was downgraded to Negative, from Stable.
Lietuvos Zinios

Economy Minister stands for Lithuania in Luxemburg
Lithuanian Economy Minister Vytas Navickas told a meeting of the European Union's (EU) Transport, Telecommunications and Energy Council in Luxemburg that Lithuania's Ignalina Nuclear Power Plant (INPP) would only be shut down in 2012 based on the changed circumstances. The minister stressed that the critical 2010-2012 situation in Lithuania would jeopardize the country's "energy security" by making it fully dependent on a single energy supplier and leaving it without any guarantees that the interruptions of supplies into the EU would never occur again. Navickas also listed the circumstances that had changed after the closure of Lithuania's EU accession talks: energy isolation remains, prices of energy resources grew by a factor of 4-5 and Lithuania is already paying the highest price for gas. "If Lithuania and the European Commission fail to come up with realistic instruments to solve the situation, we will not have another option but postpone the INPP decommissioning after 2009. (...) The years 2010-2012 will be the most difficult for us, therefore, the postponement date is 2012," he said.

Labour productivity rises
Labour productivity rose by 3.7 percent, year-on-year, in Lithuania in the first half of this year, with the average gross value added (GVA) per hour worked growing to LTL 32.79 (EUR 9.5) in January-June, the Statistics Department reported on Friday. In 2007 labour productivity rose by 4.7 percent in Lithuania as the average GVA per hour worked reached LTL 30.65 last year, a rise of LTL 3.56 from the 2006 figure. Last year the highest gross added value per hour worked, at LTL 75.09, was in the real estate and rent business, the department said.

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