Observer "Lietuva"

Lithuania Business News: Archive 2003-

WEEK 49.2008

Saturday, 6th of December

Salaries are late
With Lithuania's budget revenues running below projected levels, the state is late paying salaries to employees of some public institutions. Currently, total salaries payable amount to LTL 110 million, of which LTL 24 million is to be paid on Monday, Finance MInister Rimantas Sadzius said on Friday. "But the maximum delay is only two days. I don't think this is a tragedy," he said. The minister said the state owed salaries to many public institutions, including the offices of the government and the Seimas (Lithuania's parliament), ministries, the state tax authority, the customs office, and culture and education institutions. "However, have we been gradually transferring money to all of them: we transferred a total of LTL 90 million in the first days of December.  For example, judgers have been paid the full amount of their salaries -- those whose payday is on December 1 were the lucky ones," he said. The minister said that people would receive their salaries in the coming week. 
Lietuvos Rytas, Respublika

Aurela will fly to Poland
Lithuania's charter airline Aurela, which has lost one its biggest customers to FlyLAL, plans to start operating flights from Poland in the middle of this month. "We have signed several contracts with Polish tour operators and plan to start work there in the second half of December. We will reduce our operations in Lithuania to a minimum, or no operations at all," Aurela CEO Valdas Barakauskas said. Until now, Aurela has been the third largest operator at Vilnius International Airport after FlyLAL and Latvia's Airbaltic in terms of passenger numbers. The Lithuanian tour operator Novaturas, formerly one of the key customers of Aurela, earlier this year signed a strategic partnership agreement with FlyLAL. "All participants of the flights market are currently in a very difficult situation, because flight numbers have dropped dramatically. People think twice before flying. Compared with 2006 and 2006, demand for charter flights has declined noticeably," Barakauskas said. Aurela's aircraft operate charter flights in Western Europe and in the countries to the east. The company employs a staff of around 130 people.
Lietuvos Rytas

Leo LT profits may fall
Lithuania's national energy company Leo LT has predicted that profits could fall by LTL 225 million next year due falling power consumption in the country, despite an 18 percent rise in prices. The drop represents a 4.8 percent decline in electricity use for 2009 compared to 2008, which could mark the start of a crisis in the power market, Ramunas Biciulaitis, the CFO of Leo LT told members of the parliament's Economics Committee today. Leo LT, the government set up energy company also in charge of building new energy plants, owns the power transmission grid operator Lietuvos Energija Lithuanian Energy and two distribution companies RST and VST. Biciulaitis said that the two distributors, VST and RST, could lose around LTL 60 million each as a result of the consumption slump. Biciulaitis said that in November, a 3 percent decline had been registered. "This is a sharp correction," he said, adding that the situation in Latvia was similar.
Lietuvos Rytas

Friday, 5th of December

RST withdraws its complaint
Rytu Skirstomieji Tinklai (RST), a power distribution subsidiary of Lithuania's national energy company Leo LT, has withdrawn a complaint it filed with a court against the National Commission for Prices and Energy over its new price calculation methodology. RST said in a statement to the Vilnius Stock Exchange (VSE) on Thursday that it had asked the Supreme Administrative Court to terminate the proceedings in the case and to revoke certain protective measures taken by a lower court on September 29. Vilius Bernatonis, a member of the Leo LT management board, said that the company saw no sense in continuing the litigation with the price regulator. "The Leo Group believes that it must defend its interests by legal means when it is necessary. However, following the management change in the company, we do not want to strain our relations with the regulator and we believe that certain disputes cal be solved out of court," he said.

Legal issues of Mazeikiai Oil
The Lithuanian Court of Appeals on Thursday lifted a freeze on LTL 8.347 million worth of assets of Mazeikiu Nafta (Mazeikiu Nafta), which had been imposed at the request of Lietuvos Gelezinkeliai (Lithuanian Railways). The court said that it has no reasons to think that Mazeikiu Nafta could fail to pay damages to Lietuvos Gelezinkeliai if it lost the dispute to the railway operator. "Mazeikiu Nafta has high-valued long-term assets and operates profitably. Therefore, the amount of money exceeding LTL 8 million, which Lietuvos Gelezinkeliai is claiming, gives no ground to believe that [Mazeikiu Nafta] could fail to comply with a possible court decision in favor of the plaintiff," the court said. The state railway operator claims that Mazeikiu Nafta owes it around LTL 40 million for oil product transportation.
Respublika, Kauno Diena

Lithuanian Energy is set to spin off the Kruonis and Kaunas Plants
Lietuvos Energija (Lithuanian Energy), the power transmission subsidiary of Leo LT, is set to spin off the Kruonis Hydro Pump Storage Plant and the Kaunas Hydro Power Plant into separate companies. Lietuvos Energija's shareholder meeting on Thursday gave the go-ahead for the spin-off of the two power generating subsidiaries, the company said in a statement to the Vilnius Stock Exchange (VSE). Agreements on the establishment of Leo LT, which owns 96.4 percent of Lietuvos Energija, provides for the separation of the two power plants from the transmission grid operator within 24 months after the completion of the transaction. Under the agreements, Leo LT will own 96.4 percent of shares in the new companies each, but it should sell the stakes to the government at a symbolic price of LTL 1 within 30 workdays after the separation. 
Verslo Zinios

Thursday, 4th of December

Mazeikiai Oil signs a new agreement
Lithuania's only oil refinery Mazeikiu Nafta (Mazeikiai Oil), which is controlled by Poland's PKN Orlen, on Tuesday signed annual gasoline and diesel fuel sale contracts worth a total of USD 1.7 billion with the Dutch company Trafigura Beheer and the Swiss companies Vitol and ESC Trading. These companies have won the seaborne gasoline and diesel sale contracts for 2009 through international bidding, Mazeikiu Nafta said in a press release. "In this time of instability in the world's markets, it is very important to have long-term product sale contracts, which provide stability," Mazeikiu Nafta CEO Marek Mroczkowski said. Under two contracts with Trafigura Beheer, the refinery is to sell approximately USD 360 million worth of gasoline and USD 390 million worth of diesel fuel to the Dutch company next year. Vitol is to buy USD 360 million worth of gasoline and ESC Trading is to purchase USD 600 million worth of gasoline.
Verslo Zinios, Lietuvos Rytas

Importing less natural gas from Russia
Lithuania imported a total of 2.315 billion cubic meters of natural gas from Russia in the first nine months of this year, down 10.7 percent from 2.591 billion cubic meters a year earlier, the Economy Ministry said in a report on Tuesday. The country's total gas consumption fell by 2.7 percent over the reporting period to 2.434 billion cubic meters. Lietuvos Dujos (Lithuanian Gas), the country's biggest natural gas importer, posted a 22 percent year-on-year decline in gas imports for the nine months to 774.4 million cubic meters.
Verslo Zinios

Loan portfolio grows
The total loan portfolio held by commercial banks in Lithuania grew by LTL 744.882 million, or 1.1 percent, in October from September to LTL 71.019 billion, according to data from the Lithuanian Banks' Association. Loans to privately-owned companies rose by LTL 360.009 million, or 1 percent, month-on-month to LTL 37.725 billion. The growth compared with early January was LTL 5.171 billion, or 17.9 percent. Loans to private individuals reached LTL 28.386 billion in late October, up by LTL 277.185 million, or 1 percent, from September and up by LTL 4.709 billion, or 16.6 percent, from the start of the year.
Lietuvos Zinios

Wednesday, 3rd of December

RST projects losses
Rytu Skirstomieji Tinklai (RST), one of the two power distribution subsidiaries of Lithuania's national electricity company Leo LT, is projecting a loss of around LTL 25 million for the full year 2008. In a statement to the Vilnius Stock Exchange (VSE), RST confirmed on Tuesday a prediction by Gintautas Mazeika, the CEO of Leo LT, that the power grid company would finish the year in the red. "RST will definitely end this year with a loss," Mazeika said earlier in the day. The RST Group incurred LTL 56.12 million in losses in the third quarter of this year due to a maintenance shutdown at the Ignalina Nuclear Power Plant and increased electricity purchase costs. Its financial result for the first nine months of this year was a loss of LTL 47.7 million.
Verslo Zinios, Lietuvos Rytas

Invalda redeems a short-term private bond issue
Lithuania's investment company Invalda has redeemed a short-term private bond issue worth LTL 75 million which it sold on October 15 to RB Finansai, a company associated with Alvydas Banys, and to Indre Miseikyte. On Monday, December 1, Invalda sold a new 75-million-litas convertible bond issue to RB Finansai and Miseikyte and used the proceeds to refinance the earlier issue. Invalda is also planning to raise LTL 30 million through a public convertible bond placement, the company said in a press release on Tuesday.  The company will redeem the bond issue on July 1, 2010 at an annual interest rate of 9.9 percent, or holders will be able to convert their bonds into shares at a ratio of one bond with a nominal value of LTL 100 to approximately 18.18 shares. If all holders opted to convert their bonds into shares, that would increase Invalda's stock capital by LTL 19.091 million.
Verslo Zinios

Paper bills
TEO LT urges its customers to become more environmentally aware – to refuse receiving paper bills and every year, through joint efforts, save almost 2 thousands trees. At present, all customers using ZEBRA Internet services have the possibility, instead of receiving ordinary paper bills, to view and pay them conveniently on the upgraded online self-service website “Mano TEO” (My TEO). Starting 1 January 2009, TEO will charge a tariff of 3 LTL per month on bills to ZEBRA Internet service users who have chosen to receive paper bills by ordinary mail. Customers can refuse paper bills and choose an electronic manner of their presentation by visiting the online self-service website “Mano TEO” or by calling 1817. It is possible to pay bills on the website, available at, or through different online banking systems. According to Darius Gudačiauskas, Chief Sales Officer of TEO, paper bills will continue to be sent free of charge to customers who use voice telephony or GALA digital TV services. “However, we are urging them, too, to choose modern payment methods, for example direct debit“, - Gudacauskas said. 

Tuesday, 2nd of December

Lithuania’s transport, communications and services companies post figures
Lithuania's transport, communications and services companies posted LTL 33.6 billion in aggregate sales revenues for the first three quarters of this year, a rise of 22.1 percent from a year ago, the Statistics Department reported on Monday. Year-on-year, revenues of transport companies grew by 15.4 percent to LTL 13.8 billion and those of post and communications companies went up by 13.5 percent to LTL 3 billion. Services companies recorded a 30.2 percent rise in revenues to LTL 16.7 billion, based on preliminary data. The revenue figures do not include VAT.
Lietuvos Zinios, Verslo Zinios, Respublika

Klaipeda Stevedorig Company loads the biggest ship
The fertilizer terminal owned by Klaipedos Juru Kroviniu Kompanija (Klaipeda Stevedoring Company, or Klasco) on Saturday loaded 64,700 tons of potassium fertilizers onto a Liberian-flagged ship, the largest amount of fertilizers ever loaded onto a single vessel at the port of Klaipeda, the company said on Monday. "Although symbolic, this record is good news at a time when cargo handling volumes at the port are on the decline," Klasco CEO Valentinas Greiciunas said in a press release. Linas Liksa, the head of the fertilizer terminal, said that the 32-meter wide and 242-meter long Swift-Fortune, which sails under Liberia's flag, was the biggest ship even loaded at Klasco's quays. The draught of the loaded vessel was almost 13 meters, he said. Lietuvos Zinios

To attract more investments to Lithuania
The Lithuanian Development Agency and a Foreign Ministry division responsible for investment promotion are to combine their efforts to attract more foreign investment into the country. "On their basis, we will establish a new enterprise, Invest in Lithuania," Dainius Kreivys, the ruling coalition's candidate to be Lithuania's next economy minister, said after meeting with President Valdas Adamkus on Monday. Also, there are plans to merge export divisions of the Economy Ministry and the Foreign Ministry into a single institution, which could be named the Export Council, he said.

Monday, 1st of December

Apranga presented figures
Baltic clothing retailer Apranga has slashed its full-year consolidated pre-tax profit forecast by 53.2 percent to LTL 18.5 million and cut the annual retail sales estimate by 12.1 percent to LTL 510 million (including VAT). Apranga said in a statement to the Vilnius Stock Exchange (VSE) on Friday that the downward revision was due to adverse impacts of negative trends in the Baltic retail market and of delays in new large shopping centre openings on the group's operations. The group posted LTL 10.306 million in consolidated net profit for the first nine months of this year, down 38 percent from LTL 16.6111 million a year ago. The parent company alone recorded an 18.8 percent year-on-year decline in net profit to LTL 10.16 million, according to Apranga's financial report for January-September. The Vilnius-based company had projected LTL 39.5 million in consolidated pre-tax profit for the full year 2008, on sales of LTL 580 million.
Verslo Zinios

Central government sector debt reaches LTL 14.899
The Lithuanian central government sector's debt reached LTL 14.899 billion at the end of October, accounting for 12.9 percent of this year's projected GDP, the Finance Ministry reported on Friday. The debt widened by LTL 85.6 million in October from a month ago but narrowed by LTL 901.463 million, or 5.7 percent, compared with the start of the year. Month-on-month, domestic debt declined by LTL 48.2 million to LTL 4.021 billion and represented 27 percent of the total debt. Foreign debt increased by LTL 133.8 million to LTL 10.878 billion (73 percent). The central government sector owed LTL 10.57 billion to foreign banks and other financial institutions, and LTL 308.2 million to international organizations.

Zemaitijos Pienas reports loss
Zemaitijos Pienas, one of Lithuania's largest dairy groups, ended the first three quarters of this year with a net loss of LTL 8.336 million, versus a net profit of LTL 18.662 million in the same period last year. Consolidated sales revenue for the nine months rose by 5.6 percent year-on-year to LTL 361.492 million, according to the company's financial statements released on Friday. The group's revenue in Lithuania increased by 14.5 percent to LTL 194.875 million. Revenue in Latvia, Estonia and the CIS markets surged by 54.3 percent to LTL 86.974 million, but revenue in other European countries dropped by 13.2 percent to LTL 75.890 million.

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