Observer "Lietuva"

Lithuania Business News: Archive 2003-

WEEK 15/2009

Saturday, 11th of April

Labour productivity increased
Labor productivity rose by 1.9 percent, year-on-year, in Lithuania in 2008, with the average gross value added (GVA) per hour worked growing to LTL 34.45 the Statistics Department reported on Friday. The average added value per employee rose by 3.5 percent in comparative prices, to LTL 65,690 last year, the department said citing preliminary estimations. In 2008 the highest gross added value per hour worked, at LTL 94.3, was in the financial intermediation business. The respective rate in transport, warehousing and communication sector was LTL 65.6, real estate, rent and other business – LTL 63.69. In last five years, the rise in labor productivity was the most pronounced in industry, agriculture, hunting, forestry and manufacturing services, the department reported.
Lietuvos Zinios, Lietuvos Rytas. Respublika

Resources for the smallest
Lithuania's Ukio Bankas and Siauliu Bankas, both quoted on the NASDAQ OMX Vilnius Stock Exchange, will distribute the largest amounts - up to LTL 10 million and up to LTL 8 million, respectively - in small loans in the first stage of the public support program for small and mid-scale business. Medicinos Bankas could distribute up to 2 million litas in such loans, Investiciju ir Verslo Garantijos (Investment and Business Guarantee Society, or Invega) said in a statement. Ukio Bankas is expected to add 25 percent in own funds to the financing of the measure, Siauliu Bankas - 20 percent, and Medicinos Bankas - 16 percent. The maximum margin of the banks applied to customers will not exceed 3.1 percent. The authorities aim to assign up to LTL 120 million in total for small credits' support this year. A new call for tender for LTL 100 million support was announced on Friday.
Lietuvos Zinios, Lietuvos Rytas. Respublika

Gap in the budget
The Lithuanian central government collected LTL 3.911 billion in budget revenues in the first quarter of this year, missing its quarterly revenue target by LTL 689.7 million, or 15 percent, the Finance Ministry reported on Friday. Revenues from the value-added tax, the corporate profit tax, excise duties and the personal income tax came in below projections, it said. Revenues from the VAT, which is the single largest source of budget revenues, fell 23.9 percent short of the target to reach LTL 1.851 billion. The corporate profit tax generated LTL 372.6 million in revenues, or 25.8 percent less than planned. Revenues from excise taxes, at LTL 808.9 million, were 14.3 percent below the target. Total revenues for the first quarter, including assistance funds from the EU and other foreign countries, amounted to LT 5.592 billion, including LTL 1.68 billion in EU money.
Lietuvos Rytas, Respublika, Lietuvos Zinios

Friday, 10th of April

Do not plan dividends
The management board of Zemaitijos Pienas, one of Lithuania's largest dairy groups, proposes to pay no dividend to shareholders for 2008. Zemaitijos Pienas' shareholders will be asked to vote on this proposal at their general meeting on April 17, the company said in a statement to the NASDAQ OMX Vilnius stock exchange on Thursday. The dairy producer paid no dividend for 2007 either. Its entire undistributed profit of LTL 42.66 million was carried forward into the 2009 financial year. The company, which is listed on the Vilnius bourse, has reported LTL 4.623 million in consolidated net losses for the full year 2008, compared with LTL 24.51 million in net profits in 2007, and has slashed by more than half its planned investment in 2009.
Verslo Zinios

Slapped ratings
Fitch Ratings has downgraded its long-term issuer default rating on the Lithuanian bank Snoras to a speculative-grade B+ from BB- (BB minus). The international ratings agency has also downgraded Snoras' outstanding Eurobonds to B+ from BB- (BB minus), the bank said on Thursday. Russian businessman Vladimir Antonov owned 67.28 percent of Snoras at the end of last year and Raimondas Baranauskas, the bank's management board chairman, held a 25.01 percent stake.
Verslo Zinios

Plan worse year
Klaipedos Nafta (Klaipeda Oil), Lithuania's state-run crude oil and petroleum products terminal, sees its pretax earnings reaching LTL 11.9 million this year, down 2.8 times from the year-earlier figure of LTL 33.04 million. Full-year revenues are seen shrinking by 16.7 percent, to LTL 99.64 million this year, from LTL 119.612 million in 2008, the company said in its 2008 report. The terminal aims to handle 7.1 million tons of petroleum products this year, down from 8.2 million tons a year earlier. As of early 2009, the state owned 70.63 percent of Klaipedos Nafta and Achema held a 7.61 percent interest in the terminal, which is quoted on the I-List of the NASDAQ OMX Vilnius Stock Exchange.
Verslo Zinios, Lietuvos Rytas

Thursday, 9th of April

Prices froze
Consumer prices rose by 7.7 percent in Lithuania in March versus March 2008, while the twelve-month inflation average was 10.4 percent last month, the country's Statistics Department reported on Wednesday. In March, compared with February, consumer prices remained unchanged, it added. Earlier the department projected the harmonized monthly inflation of 0.1 percent, the annual inflation of 7.5 percent and the twelve-month inflation average of 10.5 percent for March. Month-on-month, the consumer price index was largely affected by the increases of 0.9 percent in the prices of communications goods and services, 0.8 percent in the prices of alcoholic beverages and tobacco and 0.6 percent in the prices of clothes and footwear. The rise, however, was offset by a 0.4 percent decline in the prices of housing, water, electricity, gas and other fuel, a 0.3 percent drop in the prices of transport goods and services and a 0.2 percent decrease in the prices of food and soft drinks, the department said.
Lietuvos Rytas, Respublika, Lietuvos Zinios

Downgraded ratings
Fitch Ratings on Wednesday downgraded the long-term foreign currency rating of Lithuania to BBB from BBB + and lowered the country's long-term local currency rating to BBB from A- (A minus). The outlook on both ratings remains negative, the international ratings agency said in a statement. Lithuania's short-term foreign currency rating was cut to F3 from F2. Fitch on the same day downgraded Latvia's long-term foreign currency rating to BB+ from BBB- and its long-term local currency rating to BBB- from BBB. Estonia's ratings were lowered to BBB+ from A- and to A- from A, respectively. The outlook on the ratings is negative as well. Fitch said that the downgrade of Lithuania's and Estonia's ratings "reflects the deterioration in economic prospects which will increase pressure on their macroeconomic policy frameworks." It also reflects their vulnerability to negative developments in Latvia, whose economic situation continues to deteriorate despite a 7.5-billion-euro loan package agreed with the International Monetary Fund, the European Union and other international lenders, the agency said.
Lietuvos Rytas

Profit fell
Aggregate earnings of Lithuania's insurance companies totaled LTL 85.5 million in 2008, down 35 percent from the 2007 figure of LTL 130.3 million. "Twelve insurance companies reported profits, while 5 insurance companies were making a loss," Ramunas Baravykas, deputy chairman of Lithuania's Insurance Supervisory Commission (DPK), said during a news conference on Wednesday. Financial crisis had not had any significant effects on the financial standing of the insurers, he said. The solvency rate of the insurance market showing whether the insurance companies had enough assets to cover the risks assumed was twice higher compared with the required minimum level, the official added.
Verslo Zinios, Lietuvos Rytas

Wednesday, 8th of April

Lukoil does not give up
Russia's oil company Lukoil wants to buy shares in the Lithuanian crude refinery Mazeikiu Nafta (Mazeikiai Oil) from Poland's PKN Orlen, the Polish daily Rzeczpospolita reported on Tuesday. The Russians have not made a written offer to the Polish group, but preliminary talks on this issue have taken place, according to the paper. Lukoil would not settle for a small stake, it wrote, adding that allowing the Russians into Mazeikiu Nafta would spark a political storm both in Lithuania and Poland. Lukoil's senior executives expressed their interest in investing in PKN Orlen's companies in Lithuania and the Czech Republic during the Davos forum in January. Russia's pipeline operator Transneft also approached PKN Orlen with a similar proposal. PKN Orlen's chief executive officer, Jacek Krawiec, would not comment on possible talks. "It is not my style to publicly comment on my business meetings," Rzeczpospolita quoted Krawiec as saying. He said that that no talks on the sale of a stake in the Lithuanian refinery were taking place at the moment.
Lietuvos Rytas, Respublika, Verslo Zinios, Lietuvos Zinios

Snoras earned profit
Lithuanian bank Snoras has posted a 19.3 percent rise in first-quarter net profits to LTL 20.19 million, up from LTL 16.93 million a year earlier. The bank reported its financial result to NASDAQ OMX Vilnius stock exchange on Tuesday. The Snoras Group has posted LTL 41.99 million in net profits for the full year 2008, down by 42.4 percent from LTL 72.917 million in 2007, based on pre-audit data. The bank alone saw its annual net profit slump by 55.1 percent to LTL 32.193 million. Russian businessman Vladimir Antonov owned 67.28 percent of Snoras at the end of last year and Raimondas Baranauskas held a 25.01 percent stake.
Lietuvos Rytas, Verslo Zinios

Will pay dividends
The board of Lithuania's natural gas import and distribution company Lietuvos Dujos (Lithuanian Gas), which posted LTL 63.937 million in audited net profit for 2008, has proposed to pay LTL 45 million, or 9.6 cents per share, in dividends. Shareholders will consider the proposal at the general meeting due on Apr. 22. As specified in the profit distribution draft, the shareholders of the company will distribute LTL 64.016 million in profit. The board has proposed to assign LTL 3.197 million into the mandatory reserve and LTL 15.819 million into the reserve for the expansion of activities. On top of that, the board has proposed to pay LTL 94,000 in bonuses to its members, i.e. LTL 20,000 to the chairman and the same amount to his deputy, and LTL 18,000 per each other member.

Tuesday, 7th of April

Doctors are under the government’s axe
The Lithuanian government decided on Monday to slash public sector spending by LTL 3.3 billion and is likely to make further cuts in June. "We expect that the Seimas (parliament) will debate our proposals, which we plan to submit for Thursday's session, in a constructive way. These proposals could be adopted at the Seimas in the near future. We face another stage of the budget revision in June," Prime Minister Andrius Kubilius told reporters after the Cabinet meeting. At this stage, the government expects to save LTL 700 million at the expense of the State Social Insurance Fund (Sodra) and the Compulsory Health Insurance Fund. Finance Minister Algirdas Semeta said that salaries at public institutions should be reduced by around LTL 180 million, or 10 percent and other expenses should be cut by LTL 780 million. The plan also calls for slashing investments by LTL 540 million and cutting expenses for the performance of municipal functions by LTL 370 million.
Lietuvos Rytas, Respublika, Lietuvos Zinios, Verslo Zinios

Revenues decreased
Rokiskio Suris (Rokiskis Cheese), one of the biggest dairy groups in Lithuania, said on Monday that its first-quarter sales revenues fell to LTL 126.24 million down 9.1 percent from LTL 138.9 million a year ago. The group's monthly sales for March dropped by 15.5 percent year-on-year to LTL 40.46 million, Rokiskio Suris reported to the NASDAQ OMX Vilnius stock exchange. The dairy group has posted LTL 18.719 million in consolidated losses for the full year 2008, versus LTL 34.24 million in net profits in 2007. Consolidated revenues rose by 2.1 percent last year to LTL 679.015 million. 
Lietuvos Rytas

Fewer cargos
The total volume of cargo going through the Lithuanian port of Klaipeda fell by 17.9 percent in the first quarter of this year to 6.477 million tons, down from 7.888 million tons a year ago, the Port Authority reported on Monday. In March alone, cargo traffic via the port declined by 24.2 percent year-on-year to 2.185 million tons. Year-on-year, the total volume of liquid cargo handled at the port in the first quarter fell by 12.2 percent to 2.652 million tons. The handling of bulk and dry bulk cargo declined by 18.5 percent to 2.76 million tons, and general cargo volumes were down by 24.6 percent to 1.748 million tons.
Lietuvos Rytas, Verslo Zinios

Monday, 6th of April

Will announce an official offer
Lithuania's road building and construction company Panevezio Keliai said on Friday that it will comply with the Supreme Court's ruling that it must offer to buy the remaining shares in Panevezio Statybos Trestas (PST), together with associated persons. It is planned that a tender offer will be launched in a month, at the earliest. The Supreme Court's ruling came after several years of litigation between PST's shareholders and Mindaugas Vegele, a financial broker, who managed to prove that senior executives of Panevezio Keliai and PST, together with their spouses, held a combined stake of 54.72 percent in PST in 2003 and had to make a tender offer for minority shares. However, it is possible that the shareholders will not offer a price of more than LTL 20 per share as Vegele expect them to do.
Verslo Zinios

The foundation if being destroyed, before reforms are established
A member of the Lithuanian Financial Analysts' Association has warned that the country' pension system will be totally destroyed if private pension savers are allowed to return to the state-run social insurance fund Sodra. The member of the association said that the Social Security and Labor Ministry's proposal to further cut contributions to the so-called second-pillar pension funds was not a remedy to the problems either. In an effort to help fill Sodra's revenue gap, the ministry has proposed allowing private pension savers to return to the Sodra system from early May. The pension reform, is which a part of the social insurance tax is transferred to privately run pension funds, was launched in 2004. The ministry has also proposed cutting the rate of contribution to second-pillar pension funds to 2 percent from the current 3 percent. This change would take effect retroactively, from the beginning of this year. The rate was reduced to 3 percent from 5.5 percent at the start of this year.
Verslo Zinios

"Important to save the tree, not just one branch” Lithuanian Minister of Finances
Lithuania's government must reduce costs amid economic downturn whereas efforts to maintain financing of separate business areas may result in the collapse of the whole economy, Finance Minister Algirdas Semeta believes. "We may destroy the whole tree if thinking only about one branch. Meanwhile, the tree may recover sooner with some branches cut. It is also important to choose the branch to sit on right," Semeta said in an interview to the Lietuvos Rytas daily. According to him, borrowing from the International Monetary Fund (IMF) would not enable to avoid budget cuts. "Those who think so make a big mistake. Financial stability of the state is the essential requirement of all international institutions providing assistance. Hence, even if we apply to the IMF, we will still have to reduce budget expenditures, perhaps even more than we intend now," Semeta said. Lietuvos Rytas

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