Observer "Lietuva"

WEEK 14th

Friday 4th of April, 2003

Lithuania's unemployment rate shrank by 0.3 percentage points
Lithuania's unemployment rate shrank by 0.3 percentage points percentage points over March and ran at 11.8 percent as of early April. As of April 1, 2002, the jobless rate stood at 12.6 percent, but under a new jobless rate calculation technique applied by the Lithuanian Labour Exchange since early 2003, the workforce indicator is lower. As of early April of this year, the number of officially registered unemployed people in the country of 3.5 million was 191,300, a 13.5 percent decline over the same period last year, the Labour Exchange reported. The highest unemployment level was registered in Druskininkai (26.3 percent), Pasvalys (24.6 percent) and Mazeikiai(22.7 percent), while the lowest rate was recorded in Vilnius (6 percent), Elektrenai (6.9 percent), Trakai (7.2 percent)and Prienai (7.2 percent). The highest unemployment level among Lithuania's major cities and towns was registered in Panevezys, at 15.4 percent.
(Lietuvos Zinios, Lietuvos Rytas, Respublika, Verslo Zinios)

The largest U.S. and European air companies
are suffering from the decreasing flow of passengers

Meanwhile, results of Lietuvos Avialinijos (Lithuanian Airlines or LAL) activities show that the company does not follow trends of the market and keeps growing. In January-March this year, number of passengers increased by 2.9 percent if compared to the respective period last year while the occupation rate of regular flights rose from 42.6 percent to 42.9 percent; number of passengers for one flight increased by 7.7 percent. "In spite of the fears that the war in Iraq would negatively affect flow of passengers, we have achieved the results anticipated for the first quarter of the year", Vidas Zvinys, the head of LAL, says. Beginning April 15, LAL will be offering a new flight to Brussels three times a week.
(Verslo Zinios)

Sanitas reported a 0.7 percent
increase over the same period in 2002

The biggest Lithuanian pharmaceutical company, Sanitas, reported sales of LTL 6.334 million for the first quarter of 2003, a 0.7 percent increase over the same period in 2002. The company's sales for March grew by 28.1 percent, year-on-year, to LTL 2.985 million. Auditors are expected to report their conclusions by the middle of April while shareholders of the company are to approve the financial accountability for 2002 on April 24. According to preliminary data, Sanitas earned an unaudited net profit of LTL 216,420 and reached turnover of LTL 29,484 million in 2002.
(Verslo Zinios)

Thursday 3rd of April, 2003

Shareholders of the Lithuanian producer of nitrogen fertilisers
Achema decided to allot the overall profit for investments

Shareholders of the Lithuanian producer of nitrogen fertilisers Achema, that posted an audited pre-tax profit of LTL 3.89 million and a net profit of LTL 2.55 million, decided to allot the overall profit for investments. The company is planning to invest some LTL 136 million into production development and construction of a power plant. Last year, the sum of investments accounted for LTL 75.1 million. In 2001, Achema's pre-tax profit constituted LTL 7.746 million while the company anticipates a profit of LTL 7.4 million for this year. In 2002, the fertiliser producer posted a turnover of LTL 486 million, a decline of 12 percent if compared to 2001. This year, Achema expects to raise its turnover by 16.6 percent up to LTL 567 million.
(Lietuvos Zinios)

Lithuanian life insurance companies will gladden
their clients with some 2-4 percent of their excess profit this year

According to the data provided by Verslo Zinios business daily, majority of Lithuanian life insurance companies will gladden their clients not only with the guaranteed interest but also with some 2-4 percent of their excess profit this year. As expected, UAB Lietuvos Draudimo Gyvybes Draudimas and UAB ERGO Lietuva Gyvybes Draudimas reported the largest profits for 2002 - LTL 1.8 million and LTL 0.5 million respectively. UAB Lietuvos Zemes Ukio Banko Gyvybes Draudimas is also rejoicing with a profit of LTL 328 thousand while other life insurers posted losses for last year. Yet, heads of all life insurance companies claim that the year 2002 was successful. It is forecasted that over the coming years, Lithuanian life insurance market will grow by 20 percent each year. However, nobody expects to see the growth of 50 percent, which was registered last
year.
(Verslo Zinios)

Asean Interests Limited is turning bankrupt
Asean Interests Limited (AIL) that controls Lithuania textile company Alytaus Tekstile C, is turning bankrupt, however, AIL does not intend to refuse its share in the Lithuanian company; it might only ask to process it under the name of other company that belongs to the Tolaram group.AIL and Tolaram Investments control 47.31 percent and 26.87 percent of shares in Alytaus Tekstile, respectively. The State Propery Fund and Tolaram Group have not finished negotiations that have been lasting for a year already in order to implement some amendments in the company's privatisation agreement. Lithuania's President has expressed his concern about the worsening situation in Alytaus Tekstile and deep social problems related with a possible bankruptcy. The textile company presently employs some 3 thousand people. According to preliminary data, in 2002, the company posted some 20 percent lower turnover (LTL 128 million) if compared to 2001 and incurred a net loss of LTL 7.1 million.
(Veidas)

Wednesday 2nd of April, 2003

Vilniaus Bankas and Lietuvos Zemes Ukio Bankas
concluded an agreement on the joint ATM network

On Tuesday, Vilniaus Bankas and Lietuvos Zemes Ukio Bankas concluded an agreement on the joint ATM network, which will enable their clients to cash money at the ATMs of both banks under the same conditions. Some 800,000 card holders of the banks will be offered to use 319 ATMs all around Lithuania and will be charged the same fees. "The joint project will make it possible to optimize location of the AMTs and facilitate usage of bank services", Julius Niedvaras, the president of Vilniaus Bankas, says. LZUB presently has 95 ATMs and expects to establish another 45 by the end of this year while Vilniaus Bankas is planning to add 25 ATMs to the current 225. LZUB and VB control some 10 and 38 percent of the payment card market in Lithuania, respectively. Although the alliance is open, other banks do not rush to join it; they say they have different card systems or they are focusing on other sectors at the moment.
(Verslo Zinios, Respublika, Lietuvos Zinios, Kauno Diena, Lietuvos Rytas)

Insurance company Industrijos Garantas is
to boost its authorised capital by LTL 2.5 million to LTL 7.5 million

Insurance company Industrijos Garantas is to boost its authorised capital by LTL 2.5 million to LTL 7.5 million with the help of extra contributions by its stockholders. The non-life insurance company emerged in the Lithuanian market six years ago with its then capital of LTL 3 million. The planned boost of the authorised capital will be the second one. Industrijos Garantas Director Arvydas Lescinskas confirmed that Achemos Grupe purchased 82.2 percent of the first share issue, and other owners acquired the remaining stock. Last year, Industrijos Garantas posted a profit of LTL 3 million. In 2003, it plans investing into the operational development and installation of modern technologies. The company that has been operating profitably from the very beginning of its activities is the only insurance company of the Lithuanian capital; it provides more than 40 services. Industrijos Garantas has a branch in Vilnius and 10 departments. The company employs some 100 people.
(Lietuvos Zinios, Verslo Zinios)

AB SnaigeAB Snaig reported
a 10 percent increase year-on-year

AB SnaigeAB Snaige, the largest refrigerator producer in the Baltic States, reported preliminary sales of LTL 55.562 million for the first quarter of 2003, a 10 percent increase year-on-year. Romualdas Raudonis, managing director of Snaige, said the company exceeded its quarterly sales target of LTL 45.141 million thanks to its aggressive marketing policy. He said that the market situation was not very good for the company, which exports some 92 percent of its output, in March, as the war in Iraq had slowed down consumer spending and sales in the
Western markets. Raudonis did not comment on Snaige's expected profit for the first quarter. The company posted an unaudited net profit of LTL 5.007 million for the first three months in 2002.
(Verslo Zinios, Lietuvos Rytas)

Tuesday 1st of April, 2003

Lithuania's gross domestic product (GDP) grew by 6.7 percent
Lithuania's gross domestic product (GDP) grew by 6.7 percent in 2002, compared to 2001, driven by strong growth in the transport, retail and communications sectors, as well as in construction and agriculture. The Department of Statistics earlier released preliminary estimates showing that the country's economic growth rates reached 5.9 percent in 2002 and in 2001. According to the latest data, the GDP growth rate was 6.5 percent in 2001. In the fourth quarter of 2002, the GDP grew by 7 percent year-on-year, up from the preliminary estimate of 5.4 percent. In the fourth quarter of 2002, if compared to the respective period in 2001, GDP growth made 7 percent. Last year, GDP rose by 3.9 percent over the first quarter, 7.7 percent over the second quarter and 7.8 percent over the third quarter.
(Lietuvos Zinios, Verslo Zinios, Respublika, Kauno Diena, Lietuvos Rytas)

The sale/purchase agreement of Kaunas municipal
heating utility Kauno Energija (Kaunas Energy) was concluded

Yesterday, the sale/purchase agreement of Kaunas municipal heating utility Kauno Energija (Kaunas Energy) was concluded. Kauno Energija and representatives of Gazprom, which had been acknowledged the winner of the privatisation tender, had signed an agreement several hours before the term expired. The newly established company Kauno Termofikacijos Elektrine (KTE) will control all the property and employ only several people. Presently, Gazprom has 99 percent of shares in KTE while Dujotekana and U.S. Clement Power Venture, the other two members of the consortium, own 0.5 percent of the power plant's shares each.Following the agreement, the purchaser is obliged to pay LTL 90 million within the coming 5 days while the remaining LTL 26.5 million have to be paid by the end of this year. The new owners are obliged to invest LTL 135 million by January 1, 2006.
(Verslo Zinios, Kauno Diena, Respublika)

Statoil is taking over control of the network
of Shell fuel filling stations in Latvia and Estonia

The Norwegian fuel company Statoil is taking over control of the network of Shell fuel filling stations in Latvia and Estonia; the company is likely to take over the 16 Shell fuel stations in Lithuania on the second half of April, too. "The takeover process will be started as soon as all documents for land rent are ready", Anne Martory, the head of Lietuva Statoil, says. Lietuva Statoil expected to take over the control of shell fuel stations at the beginning of this year. After the takeover, Shell fuel stations will be changed under the Statoil's standard processes.
(Lietuvos Rytas, Verslo Zinios)

Monday 31st of March, 2003

VP Market is to launch a retail
trade business in Poland

One of the biggest retail trade chains in the Baltic countries VP Market is to launch a retail trade business in Poland. It is planned to open up to 1,000 T-Market stores in Poland over the coming several years and to occupy 5-7 percent of the Polish retail market. Ignas Staskevicius, the head of VP Market chain in Lithuania, says the LTL 3.42 billion turnover achieved in the Baltic countries last year implies that the chain's development prognosis in the competitive market were true (LTL 3 billion turnover was projected). He says growth of VP Market chain constituted 35 percent last year; it has been preconditioned by expansion to the Latvian market but sales in Lithuania also increased by 20 percent. VP Market in cooperation with its real estate company NDX Development plan to allot LTL 300 million for consolidation of positions in Lithuania and Latvia. At present, VP Market controls 30 percent of the Lithuanian retail trade market. VP Market posted a turnover of EUR 149.25 million in January-February in the three Baltic countries and projects EUR 1 billion turnover for this year.
(Respublika, Verslo Zinios)

AB Utenos Trikotazas (UT) is looking
for subcontractors in the eastern countries

The Lithuanian knitwear producer AB Utenos Trikotazas (UT) is looking for subcontractors in the eastern countries. Presently, the company has 13 subcontractors in Lithuania that accomplishsome 30 percent of work. Nijole Dumbliauskiene, the CEO of Utenos Trikotazas, says that the company has posted an annual net profit exceeding LTL 10 million for several years in a row. UT anticipates similar results for this year, too. The company posted a profit of LTL 15.837 million for 2002 and decided to pay LTL 12.4 million in dividends, that is,
LTL 0.62 per share. However, Utenos Trikotazo Prekyba, Gotija and Satrija that belong to Utenos Trikotazas did not work successfully enough and reduced the overall profit of the group by LTL 2.2 million down to LTL 13.6 million. In 2002, UT acquired new equipment and information technologies for LTL 5.5 million. This year, the overall investments of LTL 6.8 million are planned; LTL 2.3 million will be used for the IT sector and LTL 0.35 million will be allotted for staff training.
(Verslo Zinios)

The Lithuanian industry confidence
rate dropped by 1 point to minus 6

The Lithuanian industry confidence rate dropped by 1 point to minus 6 in March, as a result of declining production demand and rising reserves in companies, the Department of Statistics has reported. In March, demand for industry production has considerably declined; 53 percent of the respondents admitted a decreased demand in their production. The statistics experts, however, foreshadowed improvements in the national industry in next few months, the expectation linked with existing feelings among companies. More than half of the polled firms, 61 percent, said the output levels would mount in future. The corporate managers predominantly (61 percent) look forward to steady product prices in coming months. Besides, they forecast drop of production prices: 23 percent of companies say the prices will drop, 67 percent forecast they will be steady while 10 percent of companies say the prices will grow. (Lietuvos Zinios)

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