Observer "Lietuva"

Lithuania Business News: Archive 2003-

WEEK 31/2009

Saturday, 1st of August

Closed shops
Lithuania's Computer Data International, the operator of electronics retail chain BMS Megapolis and Optimalus Kompiuteriai, has ruled to stop commercial activities from Friday, July 31. All eleven outlets of BMS Megapolis and seven stores of Optimalus Kompiuteriai, based in seven Lithuania's cities, shut their doors at 4 p.m. on Friday.
Lietuvos Rytas

Diesel will become cheaper today
Diesel excise duty in Lithuania will be reduced to LTL 947 (EUR 274) per 1,000 liters from August 1, i.e. to the minimum rate established by the European Union for the country during the transitional period. As a result, the average diesel price at pump might go down by approximately LTL 0.22 per liter. From January 1 the diesel excise duty in the country made up LTL 1,140 (EUR 330) per 1,000 liters. As estimated by the Ministry of Finance, the state budget may lose up to LTL 70 million in planned revenues this year as a result of the measure. The reduced rate will remain in effect during 5 months, i.e. by the end of 2009.
Lietuvos Zinios, Lietuvos Rytas

Experienced losses
VST, the power grid subsidiary of Lithuania's national energy company Leo LT, posted LTL 4.467 million in unaudited losses for the first half of this year, reversing the year-earlier net profit of LTL 34 million. The company attributed the losses to LTL 44.7 million increase in the costs of electricity purchase.
Lietuvos Rytas

Friday, 31st of July

Profit is changed by losses
MG Baltic, the leading Lithuania's concern active in manufacturing, trade, real estate and media businesses, posted LTL 32.81 million in audited consolidated losses for 2008, reversing the year-earlier net profit of LTL 47.842 million. The losses attributable to the concern itself made up LTL 14.009 million, MG Baltic said in its 2008 report. "This year is the year of "keeping up" for the companies of the concern: our companies pursued the objective to exceed previous growth rates during the period of economic growth. Now we seek to ensure that rates of our decline are below the scale of market contraction," Darius Mockus, MG Baltic president, said in the report. The companies would implement cost saving programs, offload inefficient operations and review investment programs so as to stay afloat, he added.
Lietuvos Rytas

The burden of debts grows
Lithuanian central government debt widened by LTL 1.863 billion l in June, to reach LTL 20.982 billion at the end of the month, and accounted for 20.9 percent of this year's projected gross domestic product (GDP), the Finance Ministry reported. Central government's domestic debt increased by LTL 350.5 million in June versus May, to reach LTL 6.766 billion. Foreign debt rose by LTL 1.512 billion, to LTL 14.216 billion (67.8 pct of the total). As of end June, long-term debt stood at LTL 19.416 billion, short-term - at LTL 1.566 billion. The central government debt widened by LTL 4.929 billion over the first six months of this year. Domestic debt increased by LTL 1.839 billion, foreign debt - by LTL 3.09 billion.
Lietuvos Rytas, Verslo Zinios

There is space for free fall
Lithuania's economy has turned back to the level of end-2006 in terms of created added value, yet there is room for further decline, Jekaterina Rojaka, senior analyst at DnB Nord Bankas, has said. "The downturn is deep enough for everybody to understand that there is no more time to delay. Yet, if the processes do not speed up, I think that there is room for further free fall. The number of bankruptcies soared by more than 120 percent in the first half of this year compared with the same period last year. Small business is the first to collapse. The worst is still to come," she said during a conference organized by the news portal. In Rojaka's opinion, the authorities should carry out real, and not "cosmetic" cutting of budget expenditures and seek to improve the opinion of foreign investors, insurers, rating agencies about Lithuania's abilities to handle the situation. When asked whether litas would be devalued, the analyst said to hope that this measure would be avoided. In Rojaka's opinion, the devaluation would not be a cure-all in Lithuania's case. "If the authorities manage to reduce the expenditures considerably on their own, it will not be necessary."
Lietuvos zinios

Thursday, 30th of July

It will be better, but not good
Lithuania's economy will bottom out this year, Finance Minister Ingrida Simonyte believes. "Some [experts] have stated that the bottom has already been reached. Anyway, the decline this year will in fact be the largest and next year we should see more positive GDP results in any case," Simonyte said in an interview to the public radio station Lietuvos Radijas (Lithuanian Radio) on Tuesday. Yet it did not mean that the budget situation would improve hence further cost saving measures in the public finance sector could not be avoided, and the absorption of the European Union (EU) funds was one of just several remaining possible sources to stimulate the economy, she added. The second half of 2009, if considering in statistical terms, should be better than the first one, Simonyte said.
Verslo Zinios

There are no guarantees that the rating will be improved
Germany's credit insurer Euler Hermes will review Lithuania's 'D' - the highest - risk rating in coming weeks, Economy Minister Dainius Kreivys has said. "We have agreed that Euler Hermes will review the country's rating in two or three weeks considering our economic assessments. We believe that the risk assessment could be more precise," he told the reporters after the meeting with Euler Hermes executives on Wednesday. Kreivys said to believe there was a chance that Lithuania's risk rating could be improved. Meanwhile, Gerd Uwe Baden, Euler Hermes chairman, would not answer whether Lithuania's rating could be changed. "We are staying in Lithuania. We intend to assess each company's case individually," he told the reporters. In June Euler Hermes assigned a 'D' rating - its highest risk rating - to Lithuania and restricted - and in some cases terminated - crediting of exports of goods to Lithuania.
Verslo Zinios, Lietuvos Rytas

Earned profit
The consolidated earnings before interest, taxes, deterioration and amortization (EBITDA) of Leo LT made up LTL 0.82 billion in 2008, NDX Energija, the private shareholder of Lithuania's national energy company, reported. Consolidated revenues totaled LTL 2.84 billion last year, while the assets of the company stood at LTL 10.06 billion as of end-2008. The value of assets excludes the Kaunas Hydroelectric Power Plant (the KHPP) and the Kruonis Pumped Storage Plant (the KPSP), which should be split from Leo LT and its electricity transmission subsidiary Lietuvos Energija (Lithuanian Energy) by May 27, 2010. Last week the parliament passed amendments to the nuclear power plant legislation opening the way for the state to boost its powers at Leo LT and authorizing the government to take a decision on either liquidation, reorganization or restructuring of Leo LT.
Lietuvos Rytas

Wednesday, 29th of July

The number of insurance policies decreased
Lithuania's insurance market, as measured by premiums written, shrank by 20.1 percent in the first half of this year, to LTL 834.816 million, from LTL 1.044 billion a year ago, the Insurance Supervisory Commission reported on Tuesday. Year-on-year, the non-life insurance segment contracted by 21.6 percent, to LTL 607.455 million and the life insurance segment fell by 15.7 percent, to LTL 227.362 million, it said. Non-life insurance accounted for 72.8 percent of all premiums written, down from 74.2 percent a year ago. Life insurance's share of the total premiums increased to 27.2 percent, from 25.8 percent. In June alone, the insurers wrote LTL 113.575 million in premiums, down 17.3 percent versus May. The amount of non-life premiums written contracted by 24.1 percent, month-on-month, to LTL 74.558 million, that of life insurance - slid by 0.2 percent, to LTL 39.017 million.
Verslo Zinios, Lietuvos Rytas, Respublika

The drop of trade is tragic
Combined turnover of Lithuania's retailers, ex VAT, totaled LTL 13.148 billion in the first half of this year, down 28.8 percent from the year-earlier figure of LTL 17.867 billion, the country's Statistics Department reported on Tuesday citing preliminary estimations. In June alone, the retail sales firmed by 0.9 percent, month-on-month, to LTL 2.252 billion. Compared with June 2008, the combined turnover of retail companies plunged by 25 percent (at comparative prices) last month. Six-month turnover of motor fuel retailers declined by 20.2 percent year-on-year, that of food retailers - 16.3 percent, non-food retailers (ex cars) - 21.8 percent. The combined turnover of motor vehicles and motorcycles wholesale, retail and repair companies plummeted by 52.6 percent in the reporting period.
Respublika, Verslo Zinios

Reduces authorized capital
Finance broker company Finasta is reducing authorized capital; it is not informed what the purpose of reduction is and how much it is reduced. It has been announced that Snoras bank group is purchasing 100% stocks of the company Finasta imoniu finansai from Invalda. The company Finasta imoniu finansai manages the bank Finasta, the finance broker company Finasta and asset management companies Invalda turto valdymas and Invalda Asset Management Latvia.
Verslo Zinios, Lietuvos Rytas

Tuesday, 28th of July

The number of Verslo Zinios
Another 6,700 people were registered as unemployed in Lithuania last week, down 3 percent from 6,900 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 208,700 as of July 24 (up from 206,100 a week earlier), which accounted for 9.75 percent of the working age population. Some 1,213 job vacancies were registered in July 17-24, down 5 percent from 1,280 vacancies a week earlier. Some 2,600 persons got employed, unchanged from the previous week.
Verslo Zinios, Respublika

Achema received back only half of revenues
Lithuanian nitrogen fertilizer and chemical product manufacturer Achema, controlled by the Achemos Grupe concern, posted LTL 527 million in revenues for the first half of this year, down about 50 percent from the year-earlier figure of more than LTL 1 billion. The company attributed the decline in revenues to lower sales volumes and a drop in prices. "Our sales volumes declined as a result of stagnation on the markets hit by global downturn. The prices tend to go down, and the price of natural gas sold to Lithuania is absolutely non-competitive - these are the main reasons behind the decline in revenues," Jonas Sirvydis, Achema CEO, said in a statement. A 19 percent drop in the average natural gas price in the first half of 2009, compared with January-June 2008, was insufficient to offset the decline in sales volumes and prices, he added. The sales of main products of the company shrank by 25 percent, year-on-year, to 913,600 tons, while the products prices declined by about 30 percent on average in January-June.
Verslo Zinios

The government borrowed LTL 60 million
The Lithuanian Finance Ministry has raised EUR 20 million via a private offering of euro-denominated government securities. The new issue of 20,000 bonds with a nominal value of EUR 1,000 each was registered with Lithuania's Central Securities Depository on Monday. No information is available as to who purchased the securities. As part of the state budget deficit financing plan, the Finance Ministry raised LTL 6.724 billion on the local and foreign markets in January-June.
Verslo Zinios

Monday, 27th of July

Encouraged banks
The Ministry of Finance announced a new invitation for banks to provide suggestions regarding provision of loans supported by the state for students. Loans supported by the state will be provided for those students whose studies are not financed by the state.

Plan expansion while sales are dropping
Palink group, the operator of the second largest Lithuania's grocery chain Iki, posted LTL 1.006 billion in sales for the first half of this year, down 6.1 percent from the year-earlier figure of LTL 1.071 billion. Iki chain operates stores in Lithuania and Latvia. However, the representatives of the chain would not specify the sales figures for individual countries, the Verslo Zinios business daily reported on Monday. "We do not expect an increase in consumption in the near term. The situation may remain largely unchanged for at least another six months. Yet, we are planning active expansion of the chain in Lithuania and in particular in Latvia, since now it is the best time for investments, which will definitely pay off after the crisis ends," the daily quoted Valdas Lopeta, the chain's spokesman, as saying. Three new outlets would be opened in Vilnius in the nearest time, he added. Iki chain currently includes 211 outlets in Lithuania and 64 stores in Latvia.
Verslo Zinios

Blocks of flats will be saved when it becomes cold
More than LTL 0.5 billion was distributed for renovation of public buildings but the owners of blocks of flats will be allowed to present proposals only from September 1. However, it is not clear whether this date is correct since the Government does not expect that banks will complement the fund. The Government undertook to renovate 2,000 houses every year. It is projected LTL 500 million of EU support and a loan of LTL 300 million from European Investment Bank for renovation. Having included banks into this model, soft loans provided by banks would be returned to banks and they would supplement finances of Revolving Fund which would be used again for renovation projects. At present LTL 785 million are allocated to the new program. This part of finances will be provided for those who renovate their accommodation via commercial banks.
Verslo Zinios

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