Observer "Lietuva"

Lithuania Business News: Archive 2003-

WEEK 17/2009

Saturday, 25th of April

Spanish will help
Spain's Iberdrola will build a more than LTL 1 billion worth 444 MW combined cycle gas unit of Lietuvos Elektrine (Lithuanian Power Plant, or LPP). LPP and Iberdrola Ingenieria y Construccion had signed a EUR 328 million worth agreement on the construction of a combined cycle gas turbine unit, LPP said in a statement. Based on the agreement, the new unit should be built in 2012. Iberdrola bid the lowest price in a contractor tender announced by the European Bank for Reconstruction and Development (EBRD) repeatedly last October. The list of bidders also included the Polish unit of Canada's engineering and construction giant SNC Lavalin, Germany's Siemens and the Swiss unit of France's Alstom.
Lietuvos Rytas

Profit has strongly melted
SEB Bank, the largest Lithuania's commercial bank controlled by Sweden's SEB group, reported LTL 26.6 million in unaudited net profit for the first three months of this year, down 5 times from the year-earlier figure of LTL 133.7 million. The unaudited net profit of SEB bank group plummeted by 5.8 times, to LTL 16.2 million, from LTL 93.9 million in January-March 2008, The earnings were estimated based on the requirements of the Bank of Lithuania and national legislation, SEB bank said in a statement. In 2008 the audited net profit of Lithuania's SEB Bank group totaled LTL 257.8 million, down 49.4 percent from the 2007 figure of LTL 509.7 million. The profit of the bank alone shrank by 29.9 percent, to LTL 347.7 million, from LTL 496.1 million a year before.
Lietuvos Rytas

Revenues decreased
Lithuania's mobile telecommunications operator Omnitel posted LTL 182 million in revenues for the first three months of this year, down 26.8 percent year-on-year. The company's EBITDA margin declined to 32.4 percent, from 39.09 percent in January-March 2008, Omnitel said in a statement. The company attributed the decline in revenues to a plunge in sales of laptops and mobile phones, which resulted on economic downturn, changes in the tax system and elimination of tax breaks. Moreover, revenues on regular subscription services declined by 20 percent in the first quarter. However, the usage of company's services increased by 20 percent compared with January-March 2008, the operator said.
Lietuvos Rytas

Friday, 24th of April

Moody changed ratings
International rating agency Moody's Investors Service has downgraded Lithuania's long-term local and foreign currency debt rating to A3, from A2. The ratings outlook is negative. Short-term rating was downgraded to P-2, from P-1, the agency said in a statement. Latvia's foreign and local currency ratings were downgraded to Baa3, from Baa1. The outlook on the ratings remains negative. Latvia's short-term rating was lowered to P-3, from P-2. For Estonia, the agency affirmed the rating of A1, yet its outlook was changed to negative, from stable. The agency also affirmed the Prime-1 short-term rating for the Baltic country. Standard & Poors and Fitch downgraded Lithuania's ratings late in March and early in April.
Verslo Zinios, Lietuvos Rytas

Profit changes losses
Pieno Zvaigzdes, the leading Lithuania's dairy company, posted LTL 3.9 million in net profit for the first three months of this year, reversing the year-earlier losses of LTL 8.8 million. Three-month sales slid by 4.4 percent, to LTL 143.6 million, from LTL 150.2 million in January-March 2008, the company said in a statement. Pieno Zvaigzdes is projecting the sales of LTL 689 million for full 2009, up 3.4 percent versus the year-earlier figure of LTL 666.3 million. In 2008 the audited net losses of the dairy company totaled LTL 4.332 million.
Verslo Zinios

Are prices on electricity going to decrease?
Electricity prices for Lithuania's consumers may decline this year, but will definitely increase in 2010, Ignas Staskevicius, member of supervisory council of Leo LT and chairman of NDX Energija, which is a private shareholder of Lithuania's national energy company, has said. "A task group [led by Energy Vice-Minister Romas Svedas] has been charged to finish its work by the middle of the year in such a way so as to ensure the functioning of electricity market already this year, since this is the only possibility to bring the prices of electricity somewhat down this year, without waiting for January 2010. No doubt, the prices of electricity will increase next year, although free market would be truly helpful in damping that process," he said during a roundtable discussion about Leo LT and the outlook of Lithuania's energy sector. On the other hand, Leo LT was working at a loss and was subsidizing the consumers since the subsidiaries of the national energy company were selling electricity at lower prices, compared with the purchase prices, he added. The prices of electricity for consumers rose by 4 cents, to 37 cents (10.7 euro cents) per 1 kWh from 2009 although Leo LT called to raise the prices by 7 cents.
Lietuvos Rytas, Lietuvos Zinios

Thursday, 23rd of April

The number of Verslo Zinios
Lithuania's public sector deficit totaled LTL 3.58 billion last year accounting for 3.2 percent of the Gross Domestic Product (GDP), the Statistics Department reported on Wednesday citing preliminary estimations. The deficit exceeded the forecast (2.3 pct GDP) owing to lower than projected budget revenues on taxes, including VAT, excise duties and income tax, it said. Central government deficit made up LTL 2.233 billion local authorities – LTL 247.7 million and social security funds – LTL 1.109 billion. As of late 2008, the public debt at nominal value made up LTL 17.37 billion, or 15.6 percent of GDP, i.e. was lower than projected (16 pct). The amount of public debt rose by LTL 676.8 million last year, although its ratio with GDP continued to decline (from 17 pct of GDP in 2007).
Verslo Zinios

Will not pay dividends
Lithuania's financially-troubled refrigerator manufacturer Snaige this year will pay neither dividends to shareholders nor annual bonuses to managers after posting losses of LTL 15.128 million for 2008. Snaige's shareholders on Wednesday left undistributed LTL 69.217 million out of the total distributable profit of LTL 71.477 million, the company said.
Verslo Zinios

Newcomers look for aviation
Star Team Group, a company set up by Martynas Laivys, a former head of Tez Tour's Lithuanian operations, is planning to buy an unnamed Lithuanian air carrier and is considering running direct flights from Vilnius to London, Paris, Milan and Barcelona. Star Team Group is set to invest between LTL 15 million and 40 million over the next three years and has already signed letters of intent with potential investors for individual projects. Representatives of Spanish and Greek tourism and aviation industries, as well as Lithuanian business people, have been mentioned among potential investors. "This is the most favorable time to invest since 2001. There are people who are both able and willing to do so." Laivys said. If the talks are successful, Star Team Group will buy a Lithuanian airline holding a license to operate passenger flights, he said.
Lietuvos Rytas

Wednesday, 22nd of April

Offers to buy technology
UK's Quadrise Fuels International, which technology for the production of emulsion fuel - a substitute for conventional heavy fuel oil for use in power generation plants, etc. - has been used by Lithuania's crude refinery Mazeikiu Nafta (Mazeikiai Oil), is mulling a possibility to sell a respective patent to the Lithuanian company controlled by Poland's PKN Orlen. Efforts were made to enable Lietuvos Elektrine (Lithuanian Power Plant, or LPP) to use new fuel, which was cheaper than HFO, Aleksandras Spruogis, Environment Ministry Undersecretary, said. "The main purpose is to enable Lietuvos Elektrine to use that fuel. As concluded by the Brits, the production of this type of fuel could be expanded in Mazeikiai, and it could be delivered to Elektrenai. Yet, the environmental impact assessment should be performed in the first place, and Lietuvos Elektrine should supplement its integrated pollution prevention and control permit with an entry on new fuel," Spruogis said. Lietuvos Elektrine, which will become the main source of electricity in Lithuania after the shutdown of Ignalina Nuclear Power Plant (INPP) at the end of this year, fired 30,000 tons of emulsion fuel last fall and this year. Yet, the quantity was too small to prove the suitability of new fuel, LPP executives said.
Lietuvos Zinios

The asset of investment funds continues to shrink
The aggregate assets of collective investment undertakings operating in Lithuania totaled LTL 364.1 million at the end of March, down 5.9 percent from LTL 386.7 million at the end of 2008, the Securities Commission reported on Tuesday. The quarterly decline was the sixth in a row, yet the first-quarter drop was far smaller compared with previous five quarters, it said. The commission attributed the fall in assets to the withdrawal of some funds from the market (redemption of fund units) and to a negative return on investment: the value of fund units eased by 0.5 percent on average in the first quarter. The total number of investors participating in collective investment undertakings stood at 42,200 at the end of March, down 0.7 percent compared with late 2008.
Lietuvos Zinios, Lietuvos Rytas

Good forecasts for litas
DnB Nord forecasts that Lithuania's gross domestic product (GDP) will slump by 12 percent this year, but expects that the country will keep its national currency, the litas, stable. The bank said in its Baltic Rim Economies report that despite the economic downturn, the tense fiscal situation and the weakening of currencies in neighboring countries, all three Baltic countries would maintain the current exchange rates of their currencies. To achieve this, the governments of Lithuania, Latvia and Estonia will make radical cuts in public spending, social payments and wages, it said. "This will help reduce the gap between wage growth and productivity growth, and avoid an external devaluation; in the longer term, this will allow restoring economic competitiveness and attracting foreign investment," Rimantas Rudzkis, chief analyst with DnB Nord Bankas, said at a meeting of the Lithuanian Industrialists' Confederation on Tuesday.
Lietuvos Rytas

Tuesday, 21st of April

Charges about Alita are presented
Prosecutors have charged Povilas Milasauskas, a former head of the Lithuanian State Property Fund (SPF), with abuse of office in connection with the privatization of Alita, one of country's leading alcoholic beverage producers. The Vilnius Regional Prosecutor's Office said on Monday that the criminal case had been referred to Vilnius District Court No. 3. The criminal case concerns the unlawful elimination of Luigiterzo Bosca, an Italian national, from Alita's privatization process, the prosecutors said. The Italian businessman bid LTL 90.7 million for a majority stake in Alita. However, the company was sold in 2003 to its management team for LTL 57.55 million. The SPF lost its case against Bosca in 2006 and had to pay him LTL 1.75 million in court-awarded damages. In 2006, the Lithuanian Constitutional Court ruled that the government's decision of December 2003, which paved the way for Alita's privatization, was unconstitutional. In the same year, a special parliamentary commission established that the state had suffered LTL 35.905 million in damages as a result of the sale.
Verslo Zinios, Lietuvos Zinios, Respublika, Lietuvos Rytas

Will issue new shares’ emission
Apranga, the largest Baltic clothes retailer controlled by MG Baltic concern, aims to raise authorized capital by LTL 20 million via new share offering to existing shareholders. The shareholders would vote on a respective proposal of the board on April 30, the company said in a statement. On June 15, 2007, Apranga issued LTL 20 million in two-year bonds. Previously the company would issue new bonds to finance the redemption of maturing issues of debt securities. MG Baltic Investment, the holding arm of MG Baltic, held 52.4 percent of Apranga as of early 2009.
Lietuvos Rytas, Verslo Zinios

The number of passengers increased
Some 16,800 passengers went through the international airport at the Lithuanian seaside resort of Palanga in the first quarter of this year, a rise of 7 percent year-on-year. Leonas Kvietkauskas, the airport's director, said that in March alone passenger traffic increased by 1 percent year-on-year to 5,930 passengers. Airlines currently operating flights from Palanga include the Scandinavian airline SAS (to Copenhagen), Norwegian Air Shuttle (to Oslo), and Latvia's Airbaltic (to Riga).
Lietuvos Rytas

Monday, 20th of April

Promised half a billion
The European Bank for Reconstruction and Development (EBRD) plans to invest up to EUR 500 million in the Baltic countries this year and next year, the bank's president, Thomas Mirow, said in Vilnius on Friday. Mirow said that the EBRD's investments in commercial banks would depend on their individual needs. "In the Baltic countries, we are planning to invest around EUR 250 million this year and another EUR 250 million next year," he said after meeting with Lithuanian Prime Minister Andrius Kubilius. "We sign a memorandum on Parex Bank yesterday in Riga, which is highly important to Latvia but could be significant to Lithuania as well. We favor further participation in the operations of other banks here in this country. We also want to support your initiatives in energy projects," he said. Mirow reiterated that potential support for banks would depend on the individual needs of a bank. In some cases, the EBDR could buy shares, and in other cases, it could provide credits or other assistance.
Verslo Zinios

Teo LT excelled the expectations
Lithuania's telecoms group Teo LT on Friday reported a net profit of LTL 43.463 million for the first quarter of this year, down 3.9 percent from LTL 45.233 million a year ago. The integrated telecommunication, Internet and TV services provider said that its first-quarter revenues fell by 1.1 percent to LTL 205.217 million, down from LTL 207.588 million in the same period last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) declined by 1.3 percent over the reporting period to LTL 94.006 million. EBITDA margin narrowed slightly, to 45.8 percent from 45.9 percent. Teo LT's pre-tax profit for the first quarter came in at LTL 57.529 million, up 7.9 percent from LTL 53.316 million a year ago.
Verslo Zinios

Number of Verslo Zinios
Lithuania's government has asked the parliament for an authorization to guarantee up to LTL 3 billion in loans for domestic banks. The amount has been included into the budget amendments, which the Seimas should pass on May 7, the news portal reports. "This amount – LTL 3 billion - is an estimate of risk factor of the banking sector. This amount has been entered into the budget bill under the proposal of the Bank of Lithuania that was its estimate of potential need in guarantees.
Verslo Zinios

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