Lithuania Business News: Archive 2003-
Saturday, 8th of November
Negative outlook for Lithuania
The international rating agency Moody's Investors Service has changed the outlook on the government of Lithuania's A2 local and foreign currency debt ratings to Negative from Stable. The outlook on the A2 foreign currency deposit ceilings has also been changed to negative. The outlook on the Aa1 country ceiling for foreign currency debt remains stable. The change in Lithuania's rating outlook resulted on the worsening economic slowdown, which may be amplified by the impact of the global liquidity crisis. The negative impact on the economy and financial system will probably cause a larger and longer-lasting impact on the government's balance sheet than previously assume, the agency has said. "There is growing evidence that Lithuania will experience a difficult economic adjustment that could last several years," says Kenneth Orchard, Moody's senior analyst. "The economy was already rapidly decelerating prior to the onset of the global liquidity crisis in mid-September. Given Lithuania's relatively large external imbalances, a 'hard landing' scenario now seems unavoidable."
Lithuania's future prime minister Andrius Kubilius said on Friday that his future center-right coalition government would leave a reduced value-added tax (VAT) rate on heating in place for the current heating season, but would abandon it in the future. "We have to drop exemptions, leaving a very small number of them," Kubilius said in an interview with Lithuanian Radio. "For example, we do not want to touch the reduced VAT on heating, although socially it is unjust in that it makes heating cheaper not only for less well-to-do people, but to also to other people, including both members of the Seimas (parliament) and business people who earn LTL 100,000. We plan to introduce a different system somewhat later," he said. Currently, the VAT on heating energy is 5 percent, compared with the standard VAT rate of 18 percent. Commenting on the idea of introducing a single tax rate on personal income, VAT and corporate profits, Kubilius gave as an example Slovakia, which has a flat tax rate of 19 percent.
Respublika, Lietuvos Rytas, Kauno Diena, Lietuvos Zinios
Alita reports figures
Lithuania's largest alcohol production and distribution group Alita reported on Friday LTL 5.9 million in consolidated losses for the first three quarters of this year, compared with LTL 6.5 million in consolidated net profits a year ago. Consolidated sales revenue for January-September increased by 12 percent year-on-year to LTL 143.9 million, the company said. Based on the results for the nine months, Alita has revised the group's annual revenue forecast down by 11.4 percent to LTL 195 million, it said. Alita confirmed that it did not anticipate a year-end profit. The company attributed the losses for January-September to the expansion of Alita Distribution, a firm it bought in 2007, and to investments in its Serbian brewery, Beogradska Industrija Piva (BIP).
Friday, 7th of November
Vilnius airport is fined
Lithuania's Competition Council has slapped a LTL 171,000 fine on Vilnius International Airport, the largest in Lithuania, for the discrimination of French-Lithuanian jet fuel supplier Naftelf. The panel also obliged the airport to provide the conditions for Naftelf to enter the jet fuel supply market in three months, the watchdog's representatives said. The airport would appeal against the decision, the airport's lawyer Kestutis Virbickas confirmed. The jet fuel supply market at the airport is now shared by three suppliers - the airport itself, RSS Motors and FlyLAL-Lithuanian Airlines, which supplies fuel to its own fleet. Meanwhile, Naftelf supplies jet fuel at the airport of Kaunas.
Kauno Diena, Lietuvos Rytas, Verslo Zinios
Alita will not suspend its production
Alita, the largest Lithuania's alcohol production and distribution group, has no intentions to suspend production this year as it expects strong demand in its products during the upcoming holiday season. Alita's CEO Vytautas Junevicius confirmed that Anyksciu Vynas (Anyksciai Wine), the wine producer controlled by Alita, would not stop production either. Meanwhile, Stumbras, the largest Lithuania's spirits producer controlled by MG Baltic concern, intends to suspend production during Christmas as a result of sales drop and resume the manufacturing on January 5. The suspension of production will be the first since the company's privatization back in 2003.
Unemployment rate in Lithuania
Lithuania's unemployment rate edged up by 0.1 percentage point versus September, to 4.6 percent in October, the Labor Exchange reported on Thursday. Compared with October 2007, the unemployment rate climbed by 0.4 points. The number of registered jobless exceeded 67,500 as of late October, while the number of jobseekers made up some 98,400. The number of vacancies declined by 21.8 percent compared with September, to 15,900 last month.
Lietuvos Zinios, Lietuvos Rytas, Respublika
Thursday, 6th of November
Vilnius airport presents figures
Vilnius International Airport, the largest in Lithuania, handled 1.8 million passengers during the first ten months of this year, a rise of 24.1 percent on the same time last year. The total number of flights increased by 23 percent over the reporting period to 33,800, the airport's spokesman, Arunas Marcinkevicius, said on Wednesday. "In October, Vilnius International Airport handled 171,100 passengers, up by a mere 4 percent compared with the same month last year. The number of flights slightly decreased, to around 3,200 flights," he said.
Respublika, Verslo Zinios
Rokiskis Cheese posts figures
Rokiskio Suris (Rokiskis Cheese), one of the biggest dairy groups in Lithuania, on Wednesday posted LTL 570.614 million in consolidated sales revenue for the first ten months of this year, down 0.1 percent from LTL 571.226 million a year earlier. Sales for October alone rose by 2.8 percent year-on-year to LTL 59.789 million, Rokiskio Suris reported to the Vilnius Stock Exchange (VSE). The group is projecting consolidated sales of around LTL 700 million for the full year 2008. It does not anticipate an annual profit this year, but has not announced its lost forecast either.
Verslo Zinios, Lietuvos Rytas
Klaipeda Oil posted figures
Klaipedos Nafta (Klaipeda Oil), Lithuania's state-run oil product terminal operator, posted LTL 98.4 million in revenues for the first ten months of this year, up 51.4 percent versus the year-earlier figure of LTL 65 million. Ten-month handling volumes soared by 49.8 percent, year-on-year, to 6.795 million tons of petroleum products, from 4.536 million tons in January-October 2007. In October alone the handling soared by 66.3 percent, to 555,900 tons as the revenues surged by 63.3 percent, to LTL 8 million, Klaipedos Nafta said in a statement to the Vilnius Stock Exchange (VSE). The company exceeded the performance figures planned for the ten-month period as a result of growing shipments of petroleum products from Russia and Belarus and resumption of reloading of the products supplied by Mazeikiu Nafta (Mazeikiai Oil).
Wednesday, 5th of November
Achema opts to cut the production of nitrogen fertilizers by half
Lithuania's nitrogen fertilizer and chemical product manufacturer Achema has opted to cut the production of nitrogen fertilizers by half as a result of surge in natural gas prices and drop in fertilizer prices. "Regretfully, the successful results of the first three quarters are now being weighed down by the effects of global crisis. In October the prices of gas peaked, while the prices of fertilizers plunged by 2-3 times, and the sales got stalled. We believe that this trend will prevail till December," Jonas Sirvydas, Achema CEO, said in a statement. The production will be reduced from November 5 till December 30, the company said.
Respublika, Lietuvos Rytas
Public sector expenditures will be cut by LTL 800 million
Lithuania's public sector expenditures will be cut by up to LTL 800 million in 2009 in an attempt to maximize budget savings. Cutting of regular expenditures and trimming of wages funds at public institutions could provide the savings of some LTL 500-800 million, Algirdas Semeta, a candidate for finance minister nominated by the center-right coalition, projects. New Cabinet would seek to reduce the expenditures of public institutions by some 15 percent, he added. "The budget at some institutions is rather strained already, while the budget of others is rather loose. We would like to align that, so that the budget is strained for all," Semeta told the reporters on Tuesday. Each institution would have to work out a 'financial draught' plan, he added.
Lietuvos Rytas, Kauno Diena, Lietuvos Zinios, Respublika, Verslo Zinios
More new cars were registered
A total of 22,738 new cars were registered in Lithuania during the first ten months of this year, up 9 percent from 20,900 registrations a year earlier, data from Autotyrimai showed on Tuesday. However, in October new car registrations dropped by 31 percent year-on-year to 1,900, the market research company said. It attributed the decline in the new car market in October to the general economic slowdown in the country, falling consumer expectations and tighter credit conditions. In October year-on-year, the registration of new cars for personal use declined by 25 percent to 1,700 and the number of cars for commercial use slumped by 65 percent to 134 units.
Verslo Zinios, Respublika
Tuesday, 4th of November
National budget totalled LTL 20.507 billion
The revenues of Lithuania's national budget, including the European Union (EU) assistance, totalled LTL 20.507 billion as of late September, accounting for 69.7 percent of the revenue figure projected for full 2008, the Finance Ministry reported on Friday citing final estimations. Excluding the EU assistance, the revenues of the national budget made up LTL 17.435 billion in January-September, slightly exceeding the projected amount of LTL 17.433 billion. Nine-month revenues of the central government budget came in at LTL 14.699 billion, missing the forecast amount of LTL 14.741 billion by 0.3 percent. The revenues of municipal budgets exceeded the target (LTL 2.692 b) by 1.7 percent, to reach LTL 2.736 billion in the reporting period. Nine-month revenues of the national budget on VAT made up LTL 7.127 billion, 6.3 percent below the planned amount. Revenues on income tax totalled LTL 3.614 billion, excise duties LTL 2.473 billion and profit tax LTL 1.946 billion. The 2008 national budget projects annual revenues of LTL 24.295 billion.
Lietuvos Rytas, Respublika, Verslo Zinios
Lithuanian banks toughened terms on loans
With the economy in crisis, Lithuania's commercial banks have further toughened the terms on loans and now consider their customers posing higher credit risk; the Bank of Lithuania has reported citing the results of its latest poll. The banks see no warming-up on the loan market in the nearest term. Moreover, the banks have admitted that they do not intend to relax the terms on loans. All banks that took part in the October poll said that the general terms on corporate loans were toughened in last six months, and changes in risk assessment were the main factor behind that measure. Moreover, the terms on loans extended to households were further toughened in the period covered by the poll as the banks saw greater risks for the national economy and the housing market in particular.
Lietuvos Rytas, Verslo Zinios
Electricity prices will rise
Electricity prices for households in Lithuania next year will rise by around 7 centas per kilowatt-hour (kWh and prices for commercial consumers will go up by some 5.3-6.5 centas, including VAT. VST, the operator of the western half of the national distribution grid, is set to increase the price for households by 5.9 centas per kWh, and the price for commercial consumers, by 4.5 centas. Rytu Skirstomieji Tinklai (RST), the operator of the eastern half, intends to increase prices by 5.93 and 5.5 centas, respectively. The management boards of VST and RST set the new prices, which do not include VAT, on Friday, the companies said. The prices are yet to be approved by National Commission for Prices and Energy, which is to announce final prices to consumers in late November. Prices for consumers are rising due to increased electricity production and transmission prices.
Lietuvos Rytas, Respublika, Lietuvos Zinios, Verslo Zinios
Monday, 3rd of November
Back to Baltic Business Monitor