Observer "Lietuva"

Lithuania Business News: Archive 2003-

WEEK 47.2008

Saturday, 22nd of November

Poverty declines
Poverty in Lithuania declined last year, but some people with incomes above the relative poverty line struggled to pay their bills and could not afford eating meat or fish at least every second day, the Statistics Department reported on Friday. Last year 645,000 people in Lithuania lived in poverty. The at-risk-of-poverty rate was 19.1 percent of the population, 0.9 percentage point lower than a year earlier, it said. The at-risk-of-poverty threshold was LTL 556 monthly for a single person and LTL 1,188 for a family of two adults and two children under 14 years of age.
Lietuvos Rytas, Respublika

Public sector debt narrows
Lithuania's public sector consolidated debt stood at LTL 15.865 billion at the end of September, accounting for 13.8 percent of this year's projected GDP, the Finance Ministry reported on Friday. The debt narrowed by LTL 833.5 million compared with the start of the year, with domestic debt down by LTL 383.3 million and foreign debt down by LTL 450.2 million. Domestic debt amounted to LTL 5.088 billion as of late September, accounting for 32.1 percent of the total public debt, and foreign debt was LTL 10.776 billion (67.9 percent).

Agreement between the neighbours
Prime ministers of the three Baltic countries agreed on Friday that a final decision on the planned energy link with Sweden should be taken in December.
The power link is part of the Baltic Interconnection Plan that is being worked out at the European Commission's initiative. Lithuania's acting Prime Minister Gediminas Kirkilas and Prime Ministers Ivars Godmanis of Latvia and Andrus Ansip of Estonia agreed during their meeting in the Estonian city of Tartu to continue cooperation on the creation of a functioning Baltic electricity market by 2012.  Task group was appointed for this purpose, the Lithuanian government's press office said. 
Lietuvos Rytas, Kauno Diena, Respublika

Friday, 21st of November

Gasoline price fall in the coutrny
Gasoline prices at the pump in Lithuania have almost returned to 2004 levels after a sharp fall in recent weeks. Lukoil Baltija stations on Thursday were selling 95 gasoline, the most popular grade in Lithuania, for LTL 2.82 per litre. At Statoil stations, the price was slightly higher, LTL 2.84 per litre. The prices are roughly the same as those charged by these chains in November 2004. The prices were then at one of their highest levels since independence. In November 2005, the price of 95 gasoline at Lukoil stations was around LTL 2.85 per litre, and at Statoil stations, it was LTL 2.88 per litre. Prices remained almost unchanged a year later, at LTL 2.87 to LTL 2.9 per litre, before soaring to LTL 3.25 and LTL 3.28, respectively, in November 2007. Thursday's 95 gasoline prices at Lukoil and Statoil stations were more than LTL 0.7 lower compared with those at the start of this year.
Lietuvos Zinios

Lithuania Shipping company reports figures
Lithuania's state-controlled shipping company Lietuvos Juru Laivininkyste (Lithuanian Shipping Company, or LJL) reported on Thursday a net profit of LTL 18.396 million for the first nine months of this year, down by 19.6 percent year-on-year. Sales revenue for January through September fell by 4.5 percent from a year earlier to LTL 66.462 million, the company said. The Klaipeda-based operator of tramp ships posted a net profit of LTL 30.137 million for the full year 2007, almost three times as high as in 2006. Its annual revenue dropped by 10.3 percent to LTL 91.701 million.
Verslo Zinios

Leo LT and VST confront
Lithuania's national electricity company Leo LT does not agree to buy shares in its power distribution subsidiary VST from three small shareholders at LTL 757.41 a share and has asked a court to establish a fair price for the shares. Leo LT has filed a suit with the Vilnius regional court asking it to establish a fair price for its mandatory share buyout, the court's public relations officer Kristina Kisieliene said on Thursday. "The shareholders demand that we buy the shares they hold in VST at a price which we deem is unfair and which was paid during the mandatory tender offer. Therefore, we are asking the court to establish a fair price," Vilius Bernatonis, a board member of Leo LT and its chief legal officer, said.  VST shares currently trade at LTL 430 a share on the Vilnius Stock Exchange. Leo LT purchased 0.81 percent of shares in VST through its mandatory tender offer last June, raising its shareholding in the company to 97.91 percent. The majority shareholder then paid LTL 757.41 per share, or LTL 22.781 million in total.
Verslo Zinios

Thursday, 20th of November

Consumer prices should edge up in Lithuania
Consumer prices should edge up by 0.2 percent in Lithuania in November from October, the country's Statistics Department forecasts. Annual inflation should reach 9.7 percent this month, while the twelve-month average should be 11.1 percent. Housing services prices should grow further in November, yet the increase should be largely offset by anticipated decline in the prices of clothes, footwear and transport, Bronislava Kaminskiene, the head of the department's Methodology and Quality Unit, said. "Changes in the prices of other goods and services will not have any significant impact on the overall inflation level in November," she said. In October the EU-harmonized monthly inflation made up 0.9 percent in Lithuania, while the annual and twelve-month average rates were 10.7 percent and 11 percent, respectively.
Lietuvos Zinios, Lietuvos Rytas

New shopping centre in Lithuania
Lithuania's Rubicon Group and Germany's ECE are planning to invest around LTL 600 million in Ozas, a new shopping and entertainment complex under construction in Vilnius, the project developers said on Wednesday. Laurynas Mituzas, the head of leasing at ECE Projektmanagement Vilnius, said that ECE and Rubicon Group, which is one of the largest business conglomerates in Lithuania, would each contribute 50 percent of the funds.  Stefan Zeiselmaier, the CEO of ECE Projektmanagement Vilnius, said in a news conference that he did not think it was a bad time to invest in Lithuania, which is currently experiencing an economic slowdown. "We believe in the prospects for Lithuania, particularly in view of its past achievements. We expect the investment to pay for itself in ten or more years. We are also looking at other cities, Kaunas and Klaipeda," he said.  Mituzas confirmed that the company had plans for more projects in Lithuania but could not say when these projects could be implemented. He said that this would depend on the situation in the credit market and on the results of the Ozas mall in Vilnius.
Lietuvos Zinios

New habits of people during the crisis
Lithuanians plan to have less entertainment, to buy less clothes or household equipment during the economic crisis; however, they do not wish to save on alcohol drinks and tobacco. The media monitoring company Nielsen carried out a poll, which showed that only 11 percent of the respondents would buy less of tobacco products during the crisis. The Latvians are the gloomiest in the Baltic countries over their future; the latest survey has shown. About 72 percent of Latvia's residents believe that their country has no chances to overcome the crisis in coming 12 months. The ranks of pessimists in Lithuania and Estonia are somewhat smaller - at 65 percent and 54 percent, respectively. As much as 90 percent of Baltic residents believe that the economy of their country is in recession, while the respective global average is way smaller, at 63 percent.
Verslo Zinios

Wednesday, 19th of November

Moody’s forecasts
The Baltic countries - Lithuania, Latvia and Estonia - will not devalue their currencies, the international rating agency Moody's Investors Service believes. The consequences would be 'catastrophic' in the longer term since the Baltic countries have large foreign debts, the news agency Bloomberg quoted Moody's analyst Kenneth Orchard as saying. "There are very few economic reasons for devaluation,'' Orchard said. "`The central banks and governments in these countries will do everything to avoid a devaluation. They would borrow abroad, go to the International Monetary Fund or the European Central Bank.'' The global financial crisis is exacerbating the recession in Estonia and Latvia, which started earlier in the year after soaring inflation cut into consumption and their property markets collapsed. Latvia's economy shrank 4.2 percent in the third quarter, the worst in the EU, and Estonia's gross domestic product (GDP) contracted 3.3 percent. Lithuania, the biggest of the three, reported third-quarter annual growth of 3.1 percent, compared with 10.5 percent in the same period of 2007, Bloomberg reports.
Lietuvos Rytas

Geonafta will pay the debt
Lithuania's government and oil production company Geonafta will each pay a half of Lithuania's debt to Sweden's Svenska Petroleum Exploration by May 2009. The amount of debt plus interest now totals some USD 17.6 million. Litigation costs, i.e. USD 1.154 million, and the costs to be imposed by German and Lithuanian courts still hearing the cases linked with the dispute will be paid by Geonafta, the government's press service has reported. On Tuesday Lithuania's court approved an amicable settlement agreement between Lithuania and Sweden's Svenska Petroleum Exploration on a USD 12.6 million amount, which, as ruled by the international arbitration court five years ago, shall be paid to Svenska as damages, plus interest. Petras Kontrimas, judge with Kretinga District Court in charge of the case, confirmed to BNS that the agreement had been approved, and it would come into effect seven days after the date of the court's decision. Darius Janulevicius, Geonafta chairman and executive at investment company Hermis Capital, said that Geonafta would pay the larger part of the debt. The final amount would depend on the timing of settlement, he added. 
Lietuvos Rytas

People still borrow a lot
Borrowing continues to grow in Lithuania, the Bank of Lithuania governor Reinoldijus Sarkinas claims. "In October the banks lent some LTL 100 million more than in September. Crediting has not been halted, that's for sure," he told the reporters on Tuesday. In October, compared with the year-earlier, borrowing rose by 24.3 percent, yet the number of consumption loans declined, Sarkinas said. The crediting market was supported by the Bank's of Lithuania decision to reduce the level of the reserve requirement for commercial banks, he said adding that the central bank would refrain from cutting the rate further in the nearest time. "We have got the positive effect - the VILIBOR rate declined by 1 percentage point," the Bank of Lithuania governor said. 
Lietuvos Rytas

Tuesday, 18th of November

Sanitas reports figures
Sanitas, the owner of pharmaceutical plants in Lithuania, Poland and Slovakia, reported LTL 15.416 million in consolidated net profit for the first nine months of this year, down 1.9 times year-on-year. In the third quarter alone, the losses of the group made up LTL 5.264 million. Sanitas partly attributed the losses to currency effects. Sanitas paid some LTL 7 million to US investment giant Merrill Lynch and other consultants for a study of the pharmaceutical company's growth options that was performed this year. Sanitas CEO Saulius Jurgelenas confirmed that Merrill Lynch International's services and other necessary services had cost the company approximately LTL 7 million.
Verslo Zinios, Lietuvos Rytas

Lifosa reports its forecasts
Lithuania's phosphate fertilizer manufacturer Lifosa has raised its total revenue forecast for the full year 2008 to between 1.7 billion and LTL 1.737 billion, up from the previous estimate of LTL 1.452 billion. Lifosa expects annual sales of diammonium phosphate, its main product, to reach 705,000 to 735,000 tons and generate 1.481 billion to LTL 1.518 billion in revenue, the company said in a statement to the Vilnius Stock Exchange (VSE) Monday. This is a downward revision from its previous diammonium phosphate sales estimate of 850,000 tons. However, the revenue estimate is up from LTL 1.296 billion. With the market for fertilizers and raw materials undergoing a correction, Lifosa is not having its best time at present. Verslo Zinios

The losses of Post
Lithuania's state postal operator Lietuvos Pastas (Lithuanian Post) reported a loss of LTL 25 million for the first three quarters of this year as revenue for the nine months fell by 4.7 percent year-on-year to LTL 161.9 million. Jurgita Cepulyte, the head of communications at Lietuvos Pastas, attributed the loss to increased labour, transport and other costs, as well as lower-than-projected revenue. The postal operator, which is 100 percent owned by the state, posted a pre-tax profit of LTL 3.057 million on revenue of LTL 169.881 million for the first nine months of 2007.
Lietuvos Rytas

Monday, 17th of November

Reducing the rate of employees’ contributions to private pension funds
Lithuania's incoming centre-right ruling coalition plans to reduce the rate of employees' contributions to private pension funds next year. Currently, the State Social Insurance Fund (Sodra) transfers 5.5 percent of the payroll-based social insurance tax, paid partly by employers and partly by employees, into private pension funds. This rate is set to be cut to 3 percent next year, according to unofficial information. With the rate at 5.5 percent, it was planned that LTL 1.256 billion would flow into second-pillar pension funds in 2009, LTL 1.378 billion in 2010 and LTL 1.464 billion in 2011.
Verslo Zinios

SODRA’s budget
Despite higher-than-projected revenue, the Lithuanian State Social Insurance Fund (Sodra) ran a budget deficit of LTL 1.069 billion in the first ten months of this year. Its budget deficit for October alone reached LTL 339.8 million, Sodra said in a press release on Friday. Revenue for January through October totalled LTL 9.085 billion, LTL 250.7 million, or 2.8 percent higher than planned and LTL 1.431 billion, or 18.6 percent, higher than in the same period last year, based on preliminary data. It was calculated that Sodra's expenditure for the ten-month period totalled LTL 10.154 billion, which was LTL 619 million, or 6.5 percent, above the projected level.
Verslo Zinios

Construction works in Lithuania
Lithuanian building companies carried out construction work for a total of LTL 3.589 billion during the third quarter of this year, a rise of 3.1 percent on the same time last year, the Statistics Department reported on Friday. Year-on-year, the total value of construction work performed within the country rose by 3.4 percent to LTL 3.551 billion, but the value of construction work carried out abroad fell by 17.7 percent to LTL 38.3 million, based on preliminary data. Investment in tangible fixed assets in Lithuania in the third quarter increased by 0.6 percent from a year earlier to LTL 5.56 billion. Investment in construction accounted for 62.7 percent of the total investment. Respublika

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