Observer "Lietuva"

Lithuania Business News: Archive 2003-

WEEK 2/2009

Saturday, 10th of January

SODRA lacked billion of litas last year
Lithuania's State Social Insurance Fund (Sodra) ran a budget deficit of LTL 1.209 billion in 2008, the fund reported on Friday citing preliminary estimations. Full-year revenues totalled LTL 11.135 billion exceeding the planned amount by LTL 63 million. Expenditures made up LTL 12.344 billion, i.e.  LTL 1.128 billion or 10 percent above the target. Pensions, which were raised twice during the year, accounted for some LTL 7.97 billion of total expenditure, exceeding the planned amount by LTL 684.5 million or 9.4 percent. Expenditures on sickness and maternity allowances made up about LTL 1.868 billion, i.e. 31.6 percent above the planned amount, as the number of beneficiaries and the rates of allowances increased.  Respublika, Lietuvos Rytas

Searches for loans
Lithuania is in talks with the European Investment Bank (EIB) and the Nordic Investment Bank (NIB) for up to LTL 700 million worth of loans in an effort to give a boost to the country's stagnating businesses. Prime Minister Andrius Kubilius confirmed this to reporters on Friday. He said that Lithuania currently has around LTL 300 million available for business financing, but the government wants to increase those financial resources to about a billion litas. "We expect to have the money next March," Kubilius said.
Lietuvos Rytas

flyLAL will be retaken by Swiss
The shareholders of ailing Lithuania's flagship carrier FlyLAL-Lithuanian Airlines have signed an agreement on the sale of 100 percent of the company to SCH Swiss Capital Holdings. FlyLAL shareholders who paid LTL 25.6 million for the carrier several years ago will now only get USD 1 million for the shares. Future owners will also extend a short-term EUR 1 million loan to the air company. The deal is expected to be closed by January 23, and FlyLAL intends to cooperate with Vilnius Airport, to which it owes about LTL 20 million, based on a short-term agreement by that date. The Swiss company plans to cover the arrears of FlyLAL to Vilnius Airport, the largest in Lithuania, over three years. FlyLAL also owes some LTL 6 million to Oro Navigacija, the Lithuanian air navigation services provider, payments to which are executed via Eurocontrol, the European Organization for the Safety of Air Navigation, which has the right to suspend the flights by debtor companies in Europe.  Lietuvos Rytas, Respublika, Lietuvos Zinios

Friday, 9th of January

Did not receive
The revenues of Lithuania's central government budget were LTL 180 million of target in December, Finance Minister Algirdas Semeta said. Full-year result was "rather good", he added without specifying any figures. "The amount planned for December was rather large, as I have mentioned repeatedly. Naturally, the revenue target was missed. Actual revenues are some LTL 180 million lower than projected. We ended the year with reserved optimism, as our Prime Minister often says," Semeta told the reporters on Thursday. Late in 2008, the state reduced its liabilities to the business sector to some LTL 0.5 billion, the major part of which was to be carried forward to 2009.
Lietuvos Rytas, Verslo Zinios

Almost half of passengers to London
Passenger traffic at Kaunas International Airport, the second largest in Lithuania, increased by 5 percent, year-on-year, to record 410,000 in 2008. The airport is mulling expansion and hopes to get contributions from private investors. Still, the airport admitted in a statement that complicated economic environment affected the flow of transit freight, which plunged by 50 percent in the reporting period. The route to London - the most popular at the airport - was taken by 185,000 passengers last year or 45 percent of overall passenger traffic. Irish budget carrier Ryanair offers flights from Kaunas to London Stansted and Luton airports as well as to Birmingham. In spring the company will resume flights to Liverpool.
Lietuvos Zinios, Verslo Zinios

IMF fuelled passions
Lithuanian Prime Minister Andrius Kubilius said on Thursday that currently the government does not plan to borrow from the International Monetary Fund. The Lithuanian central bank governor also said earlier in the day that the country does not need international financial aid at the moment. However, he did not rule out turning to international institutions for help in the future, if a sharp economic downturn led to a budget revenue shortfall. "We are not planning [to borrow] at the moment. The International Monetary Fund has given good marks to our [anti-crisis] plan. I will not attempt to predict today how the situation may develop in the future," Kubilius told reporters. Reinoldijus Sarkinas, the Bank of Lithuania's governor, said: "I don't think that the situation in Lithuania is as bad as the International Monetary Fund's representative says it is. It is quite possible that in the future we will have to cooperate with the IMF and other international organizations and to borrow, but today there is no need for borrowing." The central bank governor said he was not certain if Rosenberg had actually said that Lithuania might have to borrow from the IMF.
Lietuvos Rytas, Verslo Zinios, Respublika

Thursday, 8th of January

Unemployment rate rose
Lithuania's average unemployment rate rose by 0.2 percentage points last year compared with 2007 to return to the 2006 level of 4.8 percent, the Labor Exchange reported on Wednesday. The unemployment rate reached 5.7 percent of the working age population as of Jan. 1, 2009, compared with 5 percent a month ago and 4.3 percent a year ago, it said. The jobless rate in December was at its highest level in the past three years. The last time this unemployment level was recorded was in September 2005. The unemployment rate in January and February of that year ran at 7.5 percent. The number of registered job-seekers reached 121,300 as of early January, of whom 95,000 had the status of unemployed persons, it said.
Lietuvos Rytas, Verslo Zinios, Lietuvos Zinios

The number of companies decreased
A total of 8,511 economic entities were registered in Lithuania last year, 12 percent more than in 2007, the Statistics Department reported on Wednesday. The number of economic entities removed from the register jumped by 20.4 percent last year to 4,199, it said. The largest number of companies struck off the register in the second half of 2008 was in the public administration, construction and utilities sectors, while the smallest number was in the postal and telecommunications sector and in the transport and warehousing sector. There were 84,570 companies operating in Lithuania as of Jan. 1, 2009, an increase of 3.8 percent year-on-year.
Verslo Zinios

Prime Minister is not willing to rush
Lithuania's government will not rush to sell any interest in Klaipedos Nafta (Klaipeda Oil), the state-controlled oil products terminal, Prime Minister Andrius Kubilius has said. "We do not know and have not heard any arguments why we should rush to sell its [Klaipedos Nafta's] shares. Yet, as I have already said, we also do not see any reasons why this question should be linked with logistics problems of Mazeikiu Nafta (Mazeikiai Oil)," Kubilius told the reporters after the Cabinet meeting on Wednesday. The government realized the intention of Mazeikiu Nafta, the sole oil refinery in the Baltic, to build an oil products pipeline from Mazeikiai to Klaipeda, which was discussed with the executives of Poland's PKN Orlen, the owner of Mazeikiu Nafta, he added. Kubilius is expected to discuss the sale of shares in Klaipedos Nafta during the meeting with his Polish counterpart in Warsaw on January 14-15.
Verslo Zinios

Wednesday, 7th of January

Companies are shortening working hours
The largest Lithuania's alcohol production and distribution group Alita and its wine subsidiary Anyksciu Vynas (Anyksciai Wine) have shortened the working week to 4 days for an indefinite period. The companies opted to reduce output due to an increase in excise duty levied on spirits from Jan. 1 and continuing decline in sales. Alita, which employs a workforce of 320, is based in Alytus, in southern Lithuania, and is 83.77 percent owned by its management team. The company is quoted on the secondaries list of VSE. Alita holds 94.9 percent of Anyksciu Vynas, which has a workforce of 240. Anyksciu Vynas projected the losses of LTL 6.2 million last year due to unfavorable tax environment. The whole Alita group anticipated the losses of LTL 14 million. The group has not yet published its projections for 2009.
Lietuvos Rytas, Verslo Zinios

The success of Klaipeda
The Lithuanian port of Klaipeda handled record 29.877 million tons of cargo in 2008, up 9.2 percent compared with the year-earlier, the Klaipeda Port Authority reported citing preliminary estimations. "The precise data will only be known by mid-January. Yet the data available now show that the port achieved four new handling records in 2008 - record overall cargo handling, record handling of petroleum products, record handling of bulk fertilizers and record handling of containers," the authority said in a statement. The port reloaded 9.36 million tons of petroleum products last year, up 31.1 percent year-on-year. The handling of bulk fertilizers rose by 5.7 percent, to 5.56 million tons, and TEU containers - by 16.1 percent, to 373,300 units.
Verslo Zinios

Car owners are left in peace
The newly proposed fee in Lithuania on vehicles which might have been fifteen to twenty Lithuanian litas per month will not come into force.  Still, it has already been decided that company-owned cars will be taxed LTL 150 per month from April. The Prime Minister Andrius Kubilius said that the ordinary residents of Lithuania who have cars would not have to pay for them; nevertheless, this particular question would be discussed in the Seimas in future. The daily reminds that the president Valdas Adamkus vetoed the proposed fee on vehicles before the New Year.
Verslo Zinios, Lietuvos Rytas, Lietuvos Zinios, Respublika

Tuesday, 6th of January

Did not implement the plan
Rokiskio Suris (Rokiskis Cheese), one of the biggest dairy producers in Lithuania, posted LTL 675.811 million in preliminary consolidated unaudited sales for full 2008, up 1.6 percent from the year-earlier audited figure of LTL 664.962 million. In December alone, the sales rose by 26.8 percent, to LTL 52.917 million, from LTL 41.724 million in December 2007, the group said in a statement to the Vilnius Stock Exchange (VSE). The group earlier said its 2008 sales would reach LTL 700 million. Rokiskio Suris also anticipated it would not make any profit although it would not disclose the projected loss. The cheese maker reported LTL 13.156 million in consolidated losses for the first nine months of 2008, reversing the year-earlier net profit of LTL 30.042 million. 
Respublika, Lietuvos Rytas

Buy fewer cars
A total of 25,190 new cars were registered in Lithuania last year, down 2 percent from 25,710 registrations a year ago, data from Autotyrimai showed on Monday. In December alone, new car registrations slumped by 41 percent year-on-year to 1,256, based on preliminary data released by the market research company. A rapid market growth in the first half of 2008 was followed by an even faster decline in the second half, hence the negative result for the full year, Autotyrimai said. The company's analysts this year anticipate a decline of between 30 to 40 percent in the country's new car market, depending on the situation.
Verslo Zinios

Borrowed money
Lithuania's government borrowed LTL 100 million on domestic market via the issue of three-month Treasury bills under the average interest of 9.179 percent.
The demand in securities totaled LTL 275.7 million, while the lowest interest offered was 7.5 percent, the Bank of Lithuania reported. The previous issue of three-month T-bills was placed in mid-December 2008. Then the government issued LTL 205 million worth of securities under the average interest of 9.517 percent.
Lietuvos Rytas

Monday, 5th of January

Amount of deposits
The total amount of deposits of Lithuanian residents and companies which are held in Lithuanian commercial banks decreased by LTL 178.8 million (0.47 percent) during November, however, the number was much lower comparing it with October, as the amount of deposits fell by LTL 2.633 billion (6.4 percent) then. The amounts of terminated deposits of residents increased by LTL 364.5 million during November. Verslo Zinios

Bought Viltechmeda
US industrial and medical equipment manufacturer Moog Inc has acquired 100 percent of Viltechmeda, a Lithuanian producer of syringe infusion pumps for USD 21 million from Hanseatic Capital, a Baltic - American Enterprise fund company, and a group of Lithuanian private investors. Hanseatic Capital and private individuals controlled Viltechmeda via AITECS Medical. "We closed the deal on Tuesday. We are up to big challenges. We have been selling our products on the US market, yet that company needs us as a manufacturer of medical devices," AITECS Medical director Anatolijus Faktorovicius said. Moog Inc was interested in syringe-style infusion therapy pumps produced by the Lithuanian company, he said. The products of Viltechmeda would continue to bear the trademark of AITECS, while AITECS Medical would probably be liquidated, Faktorovicius added.
Lietuvos Rytas

Will dismiss a part of employees
Lithuania's ceramic tile manufacturer Dvarcioniu Keramika, which is owned by Poland's Cersanit, said on Wednesday that it intended to reduce its production capacity and to make 88 employees redundant. Dvarcioniu Keramika's management board has decided to close down the plant's 12 year-old Nasseti production line, which no longer complies with the required technological standards. A part of products will be supplied from the Cersanit Group's production facilities in Poland, the company said.  Dvarcioniu Keramika, which is based in Dvarcionys, a suburb of Vilnius, employed 306 people at the end of September. The planned layoffs will reduce its workforce by nearly 29 percent.
Lietuvos Rytas

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