Lithuania Business News: Archive 2003-
Saturday, 25th of July
Looks for partner
Lithuania's state postal operator Lietuvos Pastas (Lithuanian Post) aims to divest up to 49 percent in Lietuvos Pasto Finansines Paslaugos (Lithuanian Post Financial Services), its financial services subsidiary, to an investor, which would contribute to the expansion of financial services' business. Lietuvos Pastas announced a respective international tender on July 24. The winner, which is expected to be chosen in October, will acquire a new share issue of the postal operator's subsidiary. Transport Vice-Minister Rimvydas Vastakas claimed that he expected the incoming investor to submit good proposals on making a profit on financial services. Vastakas stated that the results of Lietuvos Pastas were not good, yet its wide network of offices gave a chance to develop financial services and made a profit on them. All financial mediation services, including the acceptance of periodical payments, taxes, money transfers, provision of consumption loans, are now being rendered by Lietuvos Pastas, yet will be transferred to the subsidiary gradually. Lietuvos Pastas posted LTL 28.618 million in audited losses for 2008 as its revenues shrank by almost 2 percent, compared with 2007, LTL to 224.219 million.
Interested in logistics in Lithuania
Representatives of the Chinese company Jie Cheng International Logistics and the Russian company TamCO Group met with the heads of Lietuvos Gelezinkeliai (Lithuanian Railways) in Lithuania and introduced their companies, logistics services and possibilities to carry shipments across Lithuania territory in cooperation with Lietuvos Gelezinkeliai and other Lithuanian railway companies. The representatives of Lietuvos Gelezinkeliai also introduced Lithuania’s transport system, its advantages and discussed cooperation possibilities with these foreign companies. Contracts of shipment transportation have been signed.
Lietuvos Zinios, Lietuvos Rytas
Further borrows money to the state
Snoras bank purchased government bonds, worth EUR 20 million. They have been bought through mediation of Finasta bank. Naglis Stancikas, the Vice-President and the Director of Investment Business Division of Snoras bank, has stated that the bank is a constant active participant of the securities market. Thus, developing this activity, Snoras bank has decided to purchase issue of government bonds, worth LTL 20 million. The interest rate is not announced. According to Stancikas, the turnover of bank trade of securities in controlled markets exceeded LTL 3.3 billion in 2008. The Ministry of Finance has already borrowed LTL 6.724 billion in foreign and internal markets.
Friday, 24th of July
The theatre of bonuses ended
Lithuania's parliament has approved a new procedure on the payment of parental leave benefits, which will be cut by one-tenth from September. Moreover, a parent on parental leave will not be allowed to get any extra earnings from any work while on leave. The parliament also brushed aside a proposal to reimburse for the reduced share of allowances later, when the state is financially capable of that, e.g. in 2012-2014. The procedure was passed with 66 votes for, one vote against and one abstention. All maternal (paternal) allowances already being paid or to be assigned until July 2010 will be cut by 10 percent and will stay at that level until the end of June 2012. However, a monthly benefit shall not be lower than LTL 800. Starting from July 2010, a different procedure will be applied as benefits for a parent on parental leave would comprise 90 percent of his or her salary in the first year of leave and 75 percent in the second year. An employee on parental leave will not be allowed to get any extra earnings from any work during both years. The cutting of parental leave benefits is expected to generate the savings of LTL 56 million this year, LTL 82 million in 2010 and LTL 71 million in 2011.
Respublika, Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios
Will need additional capital
The board of the Bank of Lithuania has ordered to Swedbank, one of the largest Lithuania's commercial banks, to strengthen its capital base and eliminate operational shortcomings by December 1. Earlier on Thursday the board discussed the results of checks carried out at Swedbank, the central bank reported. The checks involved the verification of credit and liquidity risk management, internal controls, a model used for the evaluation of capital adequacy, other issues. Swedbank posted LTL 351.7 million in losses for the first half of this year as it formed the provisions worth LTL 708 million, including LTL 259 million in additional general provisions.
Some allowed, others are still waiting
Lithuania's Securities Commission (VPK) has issued a permission for the commercial bank Snoras to acquire the brokerage company Finasta and the assets management company Invalda Turto Valdymas (Invalda Asset Management) from the investment company Invalda. The stakes in both companies will be acquired by Snoro Investiciju Valdymas (Snoras Investment Management), a Snoras' subsidiary. The deal shall be finalized in six months. Invalda and Snoras signed an agreement on the transfer of Invalda's financial sector companies on April 1. Snoro Investiciju Valdymas also aims to acquire stakes in Finasta Imoniu Finansai (Finasta Corporate Finances) and Invalda Asset Management Latvia. Finasta Imoniu Finansai owns 100 percent of Finasta bank.
Thursday, 23rd of July
Runs from a drowning ship
Virgilijus Poderys, chairman of Lithuania's National Control Commission for Prices and Energy, intends to resign as chairman of supervisory council of the national energy company Leo LT by early August, the official has announced after Wednesday meeting with President Dalia Grybauskaite, who believes that he should not hold the latter office. "An important thing has been emphasized - the strengthening of independent role and avoidance of any conflict of interests. The chairman of the prices commission should not hold two offices," Linas Balsys, the President's spokesman, told the reporters after Grybauskaite's meeting with Poderys. "A conflict would be very clear if I was the chairman of Leo LT supervisory council and reviewed the prices at the same time [at the commission]. However, that revision of prices will be launched in September," Poderys said. In his opinion, he should resign as chairman of Leo LT supervisory council by the beginning of August. Poderys was appointed the chairman of Leo LT supervisory council in April when the whole management of the national energy company was reshuffled at the initiative of the new government.
Lietuvos Rytas, Lietuvos Zinios, Verslo Zinios, Respublika
The number of passengers and amount of cargos decreases
Lithuania's national railway company Lietuvos Gelezinkeliai (Lithuanian Railways) saw its freight traffic decline by 31.1 percent in the first half of this year, year-on-year, to 19.75 million tons, the Statistics Department reported on Wednesday. Year-on-year, international freight volumes slumped by 36.4 percent, to 13.5 million tons, and domestic freight traffic fell by 15.7 percent, to 6.2 million tons, it said. In June alone, freight traffic of the company totaled almost 3.31 million tons, down 28.7 percent versus June 2008 and down 3 percent from May 2009. Transit shipments accounted for 43.4 percent of the total international freight traffic in January-June, down by 40.9 percentage points compared with a year ago. The railway operator is 100 percent owned by the state.
The decline of annual industrial output is 16.3 percent
Lithuania's industrial output and sales fell by 17.2 percent in the first six months of this year compared with the same period a year ago, the Statistics Department reported on Wednesday. In June alone, the country's industrial output dropped by 16.3 percent in year-on-year terms, but rose by 4.4 percent compared with May. In January-June, mining and quarrying, and manufacturing output declined by 18.7 percent, year-on-year. The mining and quarrying sector recorded a 34.2 percent drop in output, the manufacturing sector contracted by 18.6 percent, and the manufacturing sector excluding the production of refined petroleum products - by 21.7 percent. In June versus May, mining and quarrying, and manufacturing output increased by 5.8 percent, while the output in the mining and quarrying sector alone eased by 0.2 percent. The output of the manufacturing sector expanded by 5.8 percent over the month, and the manufacturing sector, excluding refined petroleum products, grew by 2.9 percent.
Wednesday, 22nd of July
Big Mac underestimated litas
Lithuania's currency, the litas, still remains undervalued versus the US dollar, whereas the euro is still much overvalued against the US currency, the Big Mac Index calculated the Economist magazine each year has shown. According to the latest index, litas is 20 percent undervalued versus the US dollar (11 pct in 2008), Estonia's kroon - by 20 percent (10 pct in 2008) and Latvia's lat - by 13 percent (2 pct in 2008). Meanwhile, the euro is 29 percent overvalued versus the US currency (50 pct in 2008). Big Mac index is based on the theory of purchasing-power parity (PPP), which says that exchange rates should equalize the price of a basket of goods in each country. In place of a range of products the Economist uses just one item, a Big Mac hamburger, which is sold worldwide. The exchange rate that leaves a Big Mac costing the same in dollars everywhere is its fair-value benchmark.
Nordea’s losses were determined by extensions
Nordea Bank Lietuva, the Lithuanian branch of the largest Nordic and Baltic financial services group Nordea, posted LTL 6.5 million in losses for the first half of this year as it formed LTL 38.6 million provisions against bad loans. "We perceive the situation on the market as it is and understand that the banks will not be able to avoid bad loans amid fast weakening of the economy," Inga Skisaker, Nordea Bank Lietuva CEO, said in a statement. Money flows of the companies weakened and their risk profile changed due to the financial crisis. The performance of the bank was also affected by worsened situation of private customers. The loan portfolio of the bank rose by 9.4 percent, year-on-year, to LTL 7 billion as of end-June. Retail loan portfolio expanded by 24.7 percent, while the amount of loans extended to companies increased by 2.5 percent in the reporting period. Retail deposits with the bank grew by 7.7 percent in the first half of this year compared with the year-earlier, while the amount of corporate deposits contracted by 10.5 percent.
The number of business trips grows
Foreigners who travelled in Lithuania with overnight stay spent LTL 1.844 billion in the country in 2008, up 5.2 percent from the year-earlier figure of LTL 1.753 billion; the country's Statistics Department reported citing the incoming tourism data. Average spending per foreign traveler (with overnight stay) shrank by 3 percent, to LTL 1,100. The biggest spenders were the tourists from the US and Switzerland, while the smallest amounts were spent by tourists from Latvia and Estonia.
Verslo Zinios, Respublika
Tuesday, 21st of July
Additional almost 7.000 of unemployed
Another 6,900 people were registered as unemployed in Lithuania last week, up 11.3 percent from 6,200 people registered a week earlier, the country's Labor Exchange said on Monday. The total number of people with the status of unemployed persons reached 206,100 as of July 17 (up from 203,600 a week earlier), which accounted for 9.63 percent of the working age population. Some 1,280 job vacancies were registered in July 10-17, up 22.3 percent from 1,047 vacancies a week earlier. Some 2,600 persons got employed, up 18.2 percent from 2,200 the previous week. There were around 1,400 vacancies in the Labor Exchange database on July 10.
Intends to make an official proposal
Lithuanian company Misota, which has recently acquired 92.25 percent of the largest Baltic ceramic tile manufacturer Dvarcioniu Keramika, aims to purchase the shares in the company it does not already own for LTL 2 per share. The official tender offer price had been established based on the weighed stock market price of the company during six months before the takeover, Juozas Raiselis, former long-time president and CEO of Dvarcioniu Keramika, said. Misota is 100 percent owned by Raico Group. Raiselis is the main shareholder of Raico Group. Misota would have to pay 1.536 million litas if all small shareholders of Dvarcioniu Keramika agreed to sell their holdings. Dvarcioniu Keramika reported on Monday that it had received a notification from Misota about the intentions of the latter company to announce a mandatory buyout offer. Misota acquired 92.25 percent of the ceramic tile manufacturer from Poland's Cersanit for LTL 1 on July 14.
Not good for SODRA
The budget of financially-troubled Lithuania's social insurance fund (Sodra) was LTL 688.8 million or 10.3 percent short of revenue target in the first half of this year, while in June alone its revenue figure was LTL 219 million below the planned amount. The revenues of the fund totaled LTL 5.966 billion in January-June, up LTL 587.7 million or 9.8 percent year-on-year. Six-month expenditures of the fund, at LTL 6.97 billion, exceeded the planned amount by LTL 111 million or 1.6 percent and were LTL 1.209 billion or 17.3 percent larger than in the first half of 2008, Sodra reported on Monday citing preliminary estimations. Sodra's deficit made up LTL 1.004 billion in January-June, and LTL 144.6 million in June alone.
Lietuvos Rytas, Respublika, Verslo Zinios
Monday, 20th of July
Fertilizer factory is ending its expansion
Lithuania's nitrogen fertilizer and chemical product manufacturer Achema has invested around LTL 100 million in a production expansion project over two years, almost doubling its urea production capacity. Achema said in a press release on Friday that it had launched a new urea production unit with a capacity of 1,000 tons per day, increasing its daily urea production capacity to 2,300 tons. "One more phase of our second investment program, slated for completion this year, is over. This project, in which we have invested more than LTL 100 million, brings us close to completing our fertilizer production expansion," Achema CEO Jonas Sirvydis said. The fertilizer manufacturer, which is based in Jonava, in central Lithuania, is part of the Achema Group, one of Lithuania's largest business conglomerates.
Lietuvos Rytas, Lietuvos Zinios
Create pension reform of the second stage
The Securities Commission intends to take care of persons who are not interested in the results of pension accumulation. It is discussed about implementation of conception of life cycle funds, according to which, a person would be attributed to a pension fund of the second stage which corresponds to his/her age group. The market evaluates this conception differently. Sarunas Ruzgys, the general director of the company DnB Nord’s Investment Management, claims that they see this conception in a twofold way: there is logic in this distribution into funds; on the other hand, such compulsory distribution may be considered ambiguously. Most of clients would like to have the right to make their investment solutions independently. Marijus Kalesinskas, head manager of the team of Tactical Property Distribution Team in SEB bank, maintains that the idea itself is innovative but there is a limited practice of application of such a system in the world. Darius Kuzmickas, head manager of Danske Capital Investiciju Valdymas, asks whether this alternative is necessary and suitable to Lithuania. Aurimas Mazdzierius, the director of Swedbank Investiciju Valdymas, maintains that it would be a good decision because it is simple. It would help participants of pension fund and decline risk of choice of wrong fund.
Order of support has been changed
The Government will finance not 50 but only 15 percent of accommodation renewal worth. Residents will be able to get long-term soft loans with 3 percent fixed annual interest rate. The Seimas cancelled the previous order of blocks of flats renovation and passed the new one. It is hoped that finances intended for increase of power efficiency of blocks of flats, including financing of the banks and private finances, will reach up to LTL 3 billion.
Lietuvos Zinios, Verslo Zinios
Back to Baltic Business Monitor