Observer "Lietuva"

Lithuania Business News: Archive 2003-

WEEK 14/2009

Saturday, 4th of April

Commission chairperson will start conducting Leo LT
New 11-strong supervisory council of Leo LT, which the shareholders of Lithuania's national energy company elected on Friday, may appoint new board next week. Meanwhile, the shareholders elected Virgilijus Poderys, the chairman of the National Commission for Prices and Energy, as the chairman of the supervisory council and president of Leo LT. The council also includes 6 representatives of the government's office and five ministries and four representatives of NDX Energija, private shareholder of the national energy company. Energy Minister Arvydas Sekmokas explained that Poderys was chosen as a natural person, not as a representative of the state, owing to his moral qualities since he was a reliable person, and the authorities sought to restore public trust in the company. "A natural person had to meet complex requirements, including public trust, competence and motivation to move forward. After long discussions and negotiations we chose Poderys," Sekmokas said. Poderys would not receive either wages or bonuses for work at Leo LT, he said.
Lietuvos Rytas, Respublika, Lietuvos Zinios

Will cut by LTL 5 billion
Lithuania's Prime Minister Andrius Kubilius has confirmed the statements of Finance Minister that budget expenditures may be cut by additional LTL 1.5-2 billion in summer or fall, thus bringing the total annual reduction to some LTL 5 billion. "If we are to keep the deficit close to 3 percent [of GDP], we have to cut the expenditures by approximately LTL 5 billion. Now we are reducing by some LTL 3.5 billion, so some LTL 1.5-2 billion remain to be cut," Kubilius told the reporters on Friday. The second reduction would be discussed with the coalition partners who had a number of proposals, he added. "We are not considering them now and postponing those discussions till June. There are certain proposals to reduce wages, trim the scale of some social schemes, restore VAT [breaks], yet no decisions have been taken as yet."
Lietuvos Zinios

Millions on renovation
The Lithuanian Economy Ministry has allocated another LTL 55 million in financing from the EU Structural Funds for the renovation of public buildings. The money will go to a number of projects, including seven education and science institutions, four health care establishments and two elderly care homes, the ministry said in a press release. This comes on top of more than LTL 106 million allocated by the ministry for the renovation of public buildings in March. In total, more than LTL 500 million in funding from the EU Structural Funds should be allocated for this purpose this year.

Friday, 3rd of April

Tez Tour mislead
Lithuania's Competition Council has imposed a LTL 40,300 on Turkish-owned international tour operator Tez Tour for misleading advertising. Last year the panel got a complaint stating that the distance between the airport and the Kadikale Resort hotel in Bodrum, Turkey, was far larger than specified by the company. The size of the fine was established considering the duration of the irregularity and the scale of ad dissemination. Moreover, the panel took into account the fact that Tez Tour repeated violation within less than a year from the imposition of previous administrative fine. Verslo Zinios

Fell by one third
Klaipedos Nafta (Klaipeda Oil), the state-run oil products terminal, reported LTL 29.2 million in revenues for the first three months of this year, down 9 percent from the year-earlier figure of LTL 32.1 million. Handling volumes shrank by 11.4 percent, to 1.95 million tons of petroleum products, from almost 2.2 million tons in January-March 2008. In March alone, the company reloaded 521,600 tons of petroleum products, down by one-third versus 778,800 tons handled in March 2008. Revenues declined by 29.7 percent, to LTL 7.8 million, from LTL 11.1 million a year earlier. Verslo Zinios

Unemployment rate increased
Lithuania's unemployment rate reached 9.5 percent in early April, up 1.3 percentage points from 8.2 percent a month ago, the Labor Exchange reported on Thursday. The number of registered job-seekers stood at 202,700 as of Apr. 1, accounting for 9.5 percent of the working age population. Among them, 175,300 people, or 8.2 percent of the working age population, had the status of unemployed persons. The Labor Exchange said that the monthly number of applicants had exceeded 40,000 for the third month in a row. Some 8,500 job vacancies were registered in March, a slump of 57.5 percent compared with the same month last year. Lietuvos Rytas

Thursday, 2nd of April

Crosses the line
Lithuania's fiscal deficit made up 3.2 percent of Gross Domestic Product (GDP) in 2008, exceeding the euro entry threshold of 3 percent. The rate also exceeded the estimation published by the Finance Ministry late in January (2.9 pct) by 0.3 percentage points. Respective preliminary estimations of the Finance Ministry had already been submitted to the European Commission, Finance Minister Algirdas Semeta confirmed on Wednesday. "Last year the fiscal deficit was 3.2 percent, above the Maastricht criterion. We have submitted our estimations to the European Commission (EC); they will be reviewed and assessed, and Eurostat experts will submit their observations," Semeta said. Back in 2007, the authorities projected the public deficit to reach 0.5 percent of GDP in 2008. However, late in September last year the government revised the projection up to some 2.35 percent of GDP. Verslo Zinios, Respublika, Lietuvos Rytas, Lietuvos Zinios

The turnover of Apranga declined
Apranga group, the largest Baltic clothes retailer controlled by MG Baltic concern, reported LTL 93.9 million in turnover for the first three months of this year, down 22.7 percent year-on-year. In March alone, the turnover of the group declined by 23.5 percent compared with March 2008, to LTL 28.9 million, Apranga said in a statement. In Lithuania, the turnover of the group shrank by 19.4 percent, to LTL 65.7 million, in Estonia - by 19.2 percent, to LTL 8.6 million, and in Latvia - by 33.4 percent, to LTL 19.6 million in January-March. The retail group currently runs a Baltic chain of 117 outlets, including 76 in Lithuania, 32 in Latvia and 9 in Estonia. Verslo Zinios

BTA Draudimas was fined
Lithuania's Insurance Supervisory Commission (DPK) has slapped a LTL 50,000 fine on Latvians-owned non-life insurance company BTA Draudimas for the provision of incorrect information.  BTA Draudimas provided incorrect information about the implementation of a plan on elimination of irregularities disclosed during the inspection of the company at the end of 2007, Laurynas Mindaugas Stankevicius, a DPK member in charge of non-life insurance, said. "Irregularities concerning the accounting, internal controls, reinsurance operations were established then. The company worked out an action plan on their elimination, which was submitted to us, and provided information about its implementation. The inspection carried out this year has proved that this information is not correct," Stankevicius said. The irregularities mostly concerned technical aspects and had no direct influence on financial stability, solvency or the quality of assets of the company, he added. Verslo Zinios, Lietuvos Rytas

Wednesday, 1st of April

Leo LT cut down salaries
Four members of the management board of Lithuania's national energy company Leo LT have agreed to sign new employment contracts, which provide for a 6 percent cut in their salaries and a significant reduction in severance pay, as well as revise non-competition terms. "We understand that the market situation and the conditions for the Leo LT Group's operations have changed considerably since last autumn, when the supervisory board set out the terms and conditions of the contracts," Vilius Bernatonis, a member of the management board and the company's legal director, said in a press release on Tuesday. "We expect that our decision will benefit the company and contribute to a successful achievement of its goals," he said. The only board member not to sign a new contract was Gintautas Mazeika, who is resigning as Leo's management board chairman and CEO on April 6. Leo's supervisory board on Monday decided to reduce the management board chairman's gross monthly salary to LTL 32,000 from the current LTL 34,000 and those of other board members to LTL 28,000 from LTL 29,750. Verslo Zinios, Lietuvos Zinios, Respublika, Lietuvos Rytas

Deficit is 1.3 percent of GDP
The Lithuanian central government's deficit for the first two months of this year stood at LTL 1.268 billion, accounting for 1.3 percent of this year's projected gross domestic product, the Finance Ministry reported on Tuesday. The deficit for February alone reached LTL 1.042 billion, or 1 percent of the projected GDP, it said. The sector's monthly revenues came to LTL 2.094 billion last month. Expenditures amounted to LTL 3.002 billion, and transactions in non-financial assets to LTL 134.8 million. Revenues for January through February totaled LTL 4.484 billion. Expenditures amounted to LTL 5.388 billion and transactions in non-financial assets to LTL 364.3 million. Verslo Zinios

The expansion of Apranga in Latvia
Apranga, the largest Baltic clothes retailer controlled by MG Baltic concern, continues expansion in neighboring Latvia. The group would open 10 outlets in Riga's mall Riga Plaza, Apranga said in a statement to the NASDAQ OMX Vilnius Stock Exchange. "In our opinion, it [Riga Plaza mall] is one of the last new malls to be opened in this region in several years to come. The overall area of our stores will reach almost 5,600 square meters", the statement quoted Apranga CEO Rimantas Perveneckas as saying. The retailer will open Zara, Apranga, Mango, Bershka, Pull and Bear, Stradivarius, Moskito, s.Oliver, Mexx and City Women outlets in Riga Plaza mall. Lietuvos Rytas, Verslo Zinios, Respublika

Tuesday, 31st of March

Less money in February as well
Lithuania's broad money supply (M3), a key indicator in the European central banking system, shrank by LTL 264.6 million in February from January to LTL 43 billion, the central bank reported on Monday. It said the M3 structure continued to reflect the deepening economic crisis and favorable conditions for saving. As a result of transactions, overnight deposits declined by LTL 249.5 million over the month and currency in circulation fell by LTL 232.4 million. This was partly offset by increases of LTL 247.8 million in deposits with agreed maturity of up to two years and of LTL 37 million in deposits redeemable at up to three months' notice, the Bank of Lithuania said. Respublika

Economy will shrink
Lithuania's Gross Domestic Product (GDP) may slump 10.5 percent in 2009, the Finance Ministry projects. In 2010 the economy will shrink by 2.6 percent, while in 2011 the GDP will expand by 4.3 percent, the ministry has said in its latest projections.  A decline in wages will contribute to the stabilization of prices, and the inflation will go down to 1.2 percent by the end of this year. In 2010 the deflation will reach 0.7 percent, according to the ministry. "Deflationary trends may also continue in 2011, and the acceptable level of inflation is expected to be reached after the strengthening of economic recovery in 2012," the ministry said in a statement. The unemployment rate may reach 13.5 percent this year and 15.4 percent in 2010. A year after the unemployment rate is expected to decline to 11.5 percent as a result of completion of economic restructurisation and use of opportunities offered by the common European Union (EU) labor market. Lietuvos Zinios, Respublika, Verslo Zinios, Lietuvos Rytas

Five banks wish to give out small loans
Five Lithuania's commercial banks - Siauliu Bankas, Medicinos Bankas, Parex, Ukio Bankas and SEB Bank - have applied to distribute LTL 70 million in state-supported small loans. The term for submitting applications in the tender announced by the Economy Ministry and Investiciju ir Verslo Garantijos (Investments and Business Guarantees, or INVEGA) expired on Monday, the ministry said in a statement. The tender commission will evaluate the bids, invite four banks for direct negotiations and eventually choose one or two winning bidders. The authorities intend to allocate up to LTL 120 million in total for the support of small loans. The government will extend to the winning bidder a four-year loan bearing a fixed annual interest of 5.5 percent during first 24 months. Later fixed interest will be replaced by the floating rate linked with the six-month VILIBOR minus 0.5 percent, but not more than 5.5 percent in total. Verslo Zinios, Lietuvos Zinios, Respublika

Monday, 30th of March

Apranga asks for shareholders’ money
The shareholders of Apranga, the largest Baltic clothes retailer controlled by MG Baltic concern, intend to raise the authorized capital of the company with additional contributions. The shareholders will vote on the measure at the meeting due on April 30. Apranga would not disclose the amount of the financial injection being planned. On June 15, 2007, Apranga placed a LTL 20 million issue of two-year bonds, which matures coming June. Previously the company would distribute new bonds to finance the redemption of maturing issues. Verslo Zinios

Cut down the ratings
The international rating agency Standard & Poor's has lowered the long-term borrowing rating of Lithuania's electricity transmission operator Lietuvos Energija (Lithuanian Energy) to 'BBB', from 'BBB+'. Short-term rating was downgraded to 'A-3', from 'A-2'. Simultaneously, the agency agreed to suspend further rating action with respect to the company at its request as it was planned to set ratings for the whole Leo LT group, Lietuvos Energija, part of Lithuania's national energy company, said in a statement. Last October Standard & Poor's lowered the long-term foreign currency borrowing rating of the company to 'BBB+', from 'A-'. The rating was placed on credit watch with negative outlook.
Verslo Zinios

Increased the bar
Parex Bankas, the Lithuanian subsidiary of the Latvian bank Parex, has obtained regulatory approval to increase its authorized share capital to LTL 222.677 million. The Bank of Lithuania's board on Thursday gave the green light for Parex Bankas to register the increased shared capital, the central bank said. Parex Bankas' sole shareholder took the decision to increase the Lithuanian bank's capital by LTL 34.528 million on February 26. The last time Parex Bankas increased its share capital, by LTL 8.149 million to LTL 188.149 million, was in late January this year.

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