Observer "Lietuva"

Lithuania Business News: Archive 2003-

WEEK 16/2009

Saturday, 18th of April

Sad forecasts
Lithuania's Gross Domestic Product (GDP) will contract by 8.5 percent in 2009, Sweden's bank Swedbank has said in its latest Baltic weekly economic review citing the latest projections. Late in March Swedbank forecast that Lithuania's economy would decline by 6 percent this year. The projection of Estonia's economic downturn has been raised to 9.2 percent, from 8 percent. As projected by Swedbank, Latvia's GDP will plummet by 15 percent this year, unchanged from previous forecasts. Average annual inflation in Lithuania will reach 5 percent this year, the bank has said affirming its previous forecast. However, the respective projected rate for Latvia has been lowered to 2 percent, from 2.5 percent, and for Estonia - to 0.4 percent, from 1.2 percent.
Lietuvos Rytas

Profit was changed by losses
Lithuania's state-controlled Lietuvos Elektrine (Lithuanian Power Plant) does not plan to pay any dividend to shareholders for 2008 after posting LTL 34.316 million in losses for the year, based on audited data. Shareholders will be asked to vote on the board's proposal to pay no dividends at their annual general meeting to be held on April 28, the company said in a statement to the NASDAQ OMX Vilnius stock exchange on Friday Lietuvos Elektrine had earlier reported a pre-audit net profit of LTL 4.357 million for 2008. The company's director, Pranas Noreika, told BNS on Friday that the profit had turned into loss due to provisions. Lietuvos Elektrine last year distributed LTL 2 million, or 1.4 centas per share, in dividends from its 2007 net profit of LTL 33.917 million.
Lietuvos Rytas

Gaps are getting bigger
Lithuania's budget revenues for the first 17 days of this month fell by LTL 351 million short of the target, Kestutis Glaveckas, the chairman of the parliament's Budget and Finance Committee, said on Friday. Glaveckas told members of the committee that the revenue shortfall was due primarily to lower-than-expected revenues from the value-added tax (VAT) and other consumption taxes. "These data are preliminary and can still change," the lawmaker said after the committee meeting. "This shows that a budget revision in necessary because the domestic market and exports are shrinking and the economic contraction is much worse than it had been expected in December," he said.
Lietuvos Rytas

Friday, 17th of April

Saving scissors got closer to pensions
The Lithuanian State Social Insurance Fund (Sodra) missed its first-quarter revenue target by LTL 158.8 million or 4.9 percent, Social Security and Labor Minister Rimantas Dagys said on Thursday. He told the parliament that Sodra's first-quarter revenues increased by LTL 518 million, or 20 percent, year-on-year, mostly due to higher salaries. Also, Sodra this year collects the health insurance tax. The fund's total revenues for the first quarter of this year reached LTL 3.059 billion. Its revenues for the first three months of 2008 were LTL 2.541 billion – LTL 517 million more than projected.
Lietuvos Rytas, Verslo Zinios

Taxes are not being collected
The Lithuanian state's first-quarter revenues from all major taxes fell short of projections, Finance Minister Algirdas Semeta said on Thursday. The minister told the parliament that consumption taxes -- the value-added tax (VAT) and excise taxes -- had had the biggest impact on the overall tax collection data. Revenues from the VAT fell by LTL 580 million short of the target to reach LTL 1.851 billion. Revenues from excise taxes, at LTL 808.9 million, were LTL 135 million lower than projected. Semeta attributed the decline in VAT revenues to lower volumes of goods and services and the weakening foreign trade, noting that the country's imports in January through February slumped by 41 percent. The personal income tax generated LTL 848.7 million in national budget revenues, LTL 45.9 million lower than planned, and LTL 232.4 million in central government budget revenues, LTL 15.5 million below the target.
Lietuvos Rytas, Verslo Zinios, Lietuvos Zinios

Moody hit Lithuania banks
Moody's Investors Service has downgraded the long-term deposit ratings and bank financial strength ratings of two Lithuanian banks -- Snoras and Ukio Bankas. The international ratings agency has downgraded Snoras' long-term global local and foreign currency deposit ratings to B3 from Ba3 and its bank financial strength rating to E+ from D-. Ukio Bankas' ratings have been lowered to B2 from Ba3 and to E+ from D-, respectively. The outlooks on the two banks' long-term ratings are negative. The outlook on Snoras' bank financial strength rating is negative, while the outlook on Ukio Bankas' rating is stable. At the same time, the agency affirmed the Not Prime short-term ratings of both banks.
Verslo Zinios

Thursday, 16th of April

Will lend less
Facing an annual deficit of some LTL 1.766 billion, Lithuania's social insurance fund (Sodra) has asked the government to extend a LTL 1.37 billion interest-free loan to balance its cash flows, yet the government has opted to only loan up to LTL 420 million till December 20, 2016, under the interest based on average interest on litas-denominated treasury bills in the first quarter of this year. The government based its decision on the opinion of Finance Ministry experts that LTL 420 million would suffice to Sodra in the second quarter of this year. Any further crediting would be considered following a revision of Sodra's 2009 budget. Sodra, meanwhile, said that the banks could extend some LTL 330-335 million in loans to cover this year's deficit of the fund. With no credits extended, payment of benefits might fall into disarray, it warned.
Lietuvos Rytas

It is planned to renovate 500 apartments this year
Lithuania's government sees LTL 4.538 billion required for the renovation of apartment buildings in the country by 2013. Based on the model of financing for the upgrade of apartment buildings as approved by the government on Wednesday, the authorities aim to renovate 4,900 apartment blocks in five years. Moreover, the government ruled to trim the state's share in renovation projects to 15 percent, from 50 percent, and establish a special fund due to extend 20-year soft loans to housing associations. The renovation of up to 500 apartment buildings could be launched this year, Prime Minister Andrius Kubilius believes. "We hope to launch the renovation of at least 500 additional buildings under the new model this year. Next year we could renovate some 1,000 apartment blocks in this way and speed up the renovation of buildings in Lithuania considerably," he told the reporters on Wednesday.
Verslo Zinios, Lietuvos Zinios

Have not met the targets
Forty-four percent of Lithuanian companies did not meet their targets last year, a survey by the international consultancy Hay Group has shown. Some 39 percent of companies globally and 45 percent of European companies said that their business results last year were worse than targeted levels, according to the survey. "Having failed to achieve their plans, 45 percent of foreign companies this year expect worse results than last year. Some 52 percent of Lithuanian respondents said that they had cut their targets for this year by 40 percent," Hay Group's managing director for the Baltic countries, Neda Songinaite, said in a press release on Wednesday. Some 42 percent of Lithuanian companies are already planning organizational changes related to decreasing their staffing levels, and 12 percent are still considering doing so, she said.
Verslo Zinios
Wednesday, 15th of April

Balance is positive
Lithuania's current account moved into surplus for the first time in five years in February. The country's current account balance was positive at LTL 70.7 million in the last month of winter, the Bank of Lithuania said on Tuesday. Compared with January, a positive change of current account balance was LTL 175 million in February, and compared with December 2008, the positive change was LTL 637.1 million, it said. The surplus of current transfers account was LTL 297.6 million in February, while in January that account ran the deficit of LTL 22.2 million. Lithuania's current account was last in surplus in August 2003. In 2008 Lithuania's current account deficit totaled LTL 12.9 billion, down 9.9 percent year-on-year, and accounted for 11.6 percent of Gross Domestic Product (GDP).
Lietuvos Rytas, Verslo Zinios

EBRD will invest
The European Bank for Reconstruction and Development (EBRD) this year plans to invest around EUR 100 million in Lithuania. Also, the EBRD, together with other international financial institutions, looks to increasing financing for banks with the aim of maintaining the flow of credits to the economy, particularly to small and medium-sized enterprises. EBRD President Thomas Mirow is to pay a visit to Vilnius this week to discuss these plans, the bank said. On Friday, Mirow is scheduled to meet with Prime Minister Andrius Kubilius, Energy Minister Arvydas Sekmokas, Finance Minister Algirdas Semeta and Vilnius Mayor Vilius Navickas, as well as business partners in the banking and energy sectors. The EBRD is ready to finance reliable Lithuanian financial institutions and companies, which currently have no, or have very limited financing capabilities and whose failure would have a severe impact on the entire economy.
Lietuvos Rytas, Verslo Zinios, Lietuvos Zinios

Furniture manufacturers will remain profitable
Lithuania's furniture manufacturer Klaipedos Baldai (Klaipeda Furniture) has decided to keep its 2008 net profit of LTL 3.043 million as retained earnings. The decision, which received the go-head from shareholders on Tuesday, brings Klaipedos Baldai's total retained earnings to LTL 32.672 million. The furniture manufacturer last year achieved a 9.02 percent increase in pretax profits to LTL 4.447 million as revenues grew by 20 percent to LTL 185.283 million, based on audited financial statements. SBA Furniture Group held a 69.9 percent stake in Klaipedos Baldai at the start of this year.
Verslo Zinios

Tuesday, 14th of April

Troubles of milk salespeople
The average natural milk purchase price in Lithuania reached LTL 593.7 per ton in March, down by 41.2 percent compared with March 2008, the Agriculture Ministry reported on Friday. Compared with February, the price declined by 6.8 percent last month. The total volume of natural milk purchased from farmers in March dropped by 5.3 percent, year-on-year, to 82,290 tons, the ministry said.

Burst of Vilkyskiai Dairy
Vilkyskiu Pienine (Vilkyskiai Dairy), one of Lithuania's most technologically advanced dairy groups, said on Friday its first-quarter consolidated sales soared by 40 percent year-on-year to LTL 34 million. The group's sales for March surged by 64 percent from a year earlier to LTL 12.54 million, the company said. Vilkyskiu Pienine has posted LTL 13.55 million in consolidated losses for the full year 2008, compared with LTL 10.01 million in net profits in 2007. The company's shares are listed on the blue-chip Main List of the NASDAQ OMX Vilnius stock exchange. The dairy producer is based in Vilkyskiai, in western Lithuania.
Verslo Zinios

Main activity cut LTL 5 million
Lithuania's Siauliu Bankas, which is controlled by the European Bank for Reconstruction and Development (EBRD) and a group of local investors, on Friday reported a net profit of LTL 1.129 million for the first quarter of this year, down from LTL 11.112 million a year ago. The bank attributed the decline in its net profit to provisions for doubtful assets and a decrease in interest income due to an increase in the price of financial resources. Siauliu Bankas, which focuses on providing financing to small and medium-sized businesses, has posted a net profit of LTL 17.525 million for the full year 2008, down 35.7 percent compared with 2007. The EBRD and six Lithuanian shareholders, acting in concert, control a combined stake of almost 40 percent in the bank, which is headquartered in Siauliai, in the northern part of the country.
Verslo Zinios

Monday, 13th of April

Easter Holidays.

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