Observer "Lietuva"

WEEK 18th

Saturday 3rd of May, 2003

Microsoft to establish a department in Lithuania
Microsoft has reported about its strategic decision to establish a department in Lithuania. Officially, UAB Microsoft Lietuva will be opened this month.
Up to now, the company was operating in Lithuania from Riga (Latvia). Torben Andersen, the head of Microsoft Baltic, says that the decision to establish a local department was made because of the growing market. The company launched its activities in Riga in 1999 and the sales volume has increased by 300 percent in the Baltic states since then.
Microsoft has not indicated the sum that would be invested into the establishment of the department in Lithuania.
Over the first quarter of this year, the income of Microsoft made USD 7.84 billion, an increase of 8 percent if compared to the respective period in 2002.
(Respublika)

Vilniaus Degtine is working profitably this year
According to preliminary data, Vilniaus Degtine, the Lithuanian vodka producer in the process of privatization, earned a net profit of LTL 155,000 for the first quarter of this year.
In January-March of 2002, Vilniaus Degtine suffered a loss of LTL 228,300.
"The first-quarter operating results are on the positive side due to an increase in sales," Raimonda Palioniene, chief accountant of Vilniaus Degtine, explained.
The company's turnover rose by 1.3 percent year-on-year from LTL 5.22 million to LTL 5.287 million. The three-month sales of alcoholic beverages increased by 4.7 percent from 611,000 liters to 640,000 liters.
(Lietuvos Zinios, Lietuvos Rytas)

Gazprom was asked to improve its financial offer
Russia's gas giant Gazprom has been asked to improve its financial offer in the tender for the sale of a 34 percent equity stake in the natural gas company Lietuvos Dujos (Lithuanian Gas).
Gazprom has been given time to improve its offer until May 23. Deputy Economy Minister Nerijus Eidukevicius, chairman of the privatization tender commission, says that Gazprom has been asked to specify all the details in its financial offer, including the price of the equity stake and natural gas supply price.
According to unofficial data, Gazprom has offered to pay only LTL 80 million for a 34 percent stake in Lietuvos Dujos, while the government wanted Gazprom pay LTL 116 million, that is, the price a German consortium consisting of Ruhrgas and E.ON Energie paid for their 34 percent stake in the Lithuanian company last year.
(Respublika)

Friday 2nd of May, 2003

BMS' sales grew by 35 percent in the first quarter of the year
The computer manufacturer and dealer, UAB BMS, boosted its sales volume by 35 percent over the first three months this year. In 2002, the company sold hardware for LTL 7.9 million. BMS is planning to raise its sales from LTL 39 million last year to LTL 52 million this year.
In January-March, sales of digital cameras and laptops showed the largest growth; personal computers assembled by BMS were also popular.
"Computers are a seasonal good. Beginning of a year is usually a difficult period for computer dealers, yet we managed to post a growth for the first quarter this year", Arturas Afanasenka, the head of BMS, was delighted.
This year, BMS is going to invest LTL 7 million into the company's development and double its trade area from 2,000 up to 4,200 square metres.
(Verslo Zinios)

Mazeikiu Nafta posted a Q1 profit of LTL 115.8 million
Mazeikiu Nafta (Mazeikiai Oil) has announced a preliminary unaudited profit of LTL 115.8 million while the company's financial result for the first quarter of 2002 was a loss of LTL 104.4 million. The first quarter financial result is based on the US Generally Accepted Accounting Principles (GAAP). Under the Lithuanian accounting principles (LAP), the company's financial result for the first three months of 2003 was a net profit of LTL 140.2 million versus a loss of LTL 81 million in 2002.
Nelson English, CEO of Mazeikiu Nafta, said the company's financial results for the first quarter reflected Mazeikiai Nafta's progress and favourable trends in the European oil and oil product market.
The refinery processed nearly 1.8 million tons of crude oil in the first quarter of 2003, some 300,000 tons more than in the same period last year. The company's Butinge crude oil terminal handled 2.7 million tons of oil in the first three months of this year, compared to 91,200 tons in the first quarter of 2002.
In January-March, the company paid LTL 423.7 million to the state budget in taxes; last year the figure made LTL 376.4 million.
(Respublika, Lietuvos Rytas, Lietuvos Zinios)

Lithuania's export rose by 10.7 percent last year
The Department of Statistics has reported that Lithuania's export rose by 10.7 percent in 2002 if compared to a previous year; the import grew by 12.4 percent.
According to the final data, the country exported goods for LTL 20.291 billion while the import volume made LTL 28.562 billion. The overall country's foreign trade balance was negative and made LTL 8.272 billion.
The largest amount of goods was exported to the EU countries; export to CIS countries made 19.2 percent.
(Lietuvos Zinios)

Wednesday 30th of April, 2003

Insurance market has shrunk
According to preliminary data provided by the State Insurance Supervisory Authority (SISA), Lithuanian insurance companies wrote LTL 76.491 million in premiums of the mandatory motor third party liability insurance (MMTPLI), a decline of 14.1 percent if compared to the respective period last year. In March alone, Lithuanian insurance companies wrote LTL 46.1 million in premiums, a drop of 30.2 percent from March 2002. SISA says that the lower number of regular agreements and the discounts applied for their prolongation are the major reasons of the decline.
Over the first quarter of this year, 394 thousand regular mandatory insurance agreements were signed for LTL 65.5 million in premiums. If compared to the respective period in 2002, the number of agreements dropped by 5.6 percent while the sum of premiums declined by 20.3 percent. In January-March this year, Lithuanian insurance companies paid LTL 17.3 million in claims.
The largest Lithuanian insurer, Lietuvos Draudimas, signed LTL 28.475 million in MMTPLI premiums and controlled 37.2 percent of the market in the first quarter of this year. Premiums signed by the second largest insurance company, ERGO Lietuva, dropped by 36 percent down to LTL 10.719 million while the company's share in the market shrank from 18.8 to 14 percent.
The sum of premiums signed by LB Draudimas rose by 4.1 percent up to LTL 8.505 million while its share in the market grew from 9.2 to 11.1 percent.
(Respublika)

Lithuania's GDP grew by 9.1 percent in the first quarter of the year
Lithuania's gross domestic product (GDP) grew by 9.1 percent in the first quarter of this year compared with the same period a year earlier, amid rapid growth in the sectors of manufacturing, electricity, gas and water supply, construction, transport, storage and communications.
According to preliminary data provided by the Statistics Department, GDP totaled LTL 12.203 billion at constant prices in January-March. Over the first quarter in 2002, GDP increased by 3.9 percent while the overall annual growth made 6.7 percent.
This year, GDP per capita amounted to LTL 3,524 in the three months, up by 9.5 percent or LTL 306 over the same period last year.
According to the statement, the retail trade, hotel and restaurant sectors grew at a lower rate the country's GDP this year. The value added in the quarrying and mining sectors and financial intermediation moved lower in January-March of 2003 versus the same period in 2002, pushed down by the falling value added in the insurance sector.
(Kauno Diena, Respublika, Lietuvos Zinios, Lietuvos Rytas)

The first pension funds will launch their activities in Lithuania in autumn
On July 1 this year, pension funds will launch their activities in Lithuania; working people will have a possibility to direct part of the taxes they pay to private pension funds. Specialists forecast that the first pension funds will start operating in autumn.
Yesterday, Hansabankas presented the pension fund project, Hansa Pensija. Hansabank's group already controls similar funds in Latvia and Estonia.
Hansa Pensija will offer three pension programs. Younger people will be offered to choose more profitable programs, yet more risky, too.
Vilniaus Bankas also has ambitions to enter the pension fund market; the activities will be administered by its secondary company VB Gyvybs Draudimas.
(Verslo Zinios, Lietuvos Rytas, Lietuvos Zinios)

Tuesday 29th of April, 2003

Lithuanian power plant posted a profit of LTL 10.5 million
Lietuvos Elektrine (Lithuanian Power Plant) earned an unaudited Q1 net profit of LTL 10.501 million, an increase of 19.3 percent from LTL 8.805 million a year ago.
In 2002, Lietuvos Elektrine posted a net profit of LTL 20.065 million. The company is anticipating a pre-tax profit of LTL 20.768 million and revenues of LTL 164.758 million for 2003.
Over the three months of this year, Lietuvos Elektrine sold 162 million kWh; the annual quota set by the Ministry of Economy makes 588 million kWh.
According to Rolandas Jankauskas, the company's chief accountant, part of the first-quarter profit, as usual, will go towards repairs of equipment and other maintenance works.
In January-March of 2003, Lietuvos Elektrine reported a revenue drop of 1.5 percent year-on-year.
(Respublika, Verslo Zinios)

Kraft Foods Lietuva boosted its revenues by 4 percent last year
Kraft Foods Lietuva, one of the largest confectionery producers in the Baltic states, said its revenues grew by 4 percent and exceeded LTL 250 million in 2002.
Last year, the company sold nearly 20 tons of production, up by 3.3 percent over the figure in the previous year.
The rise in revenues was due to growing exports last year. Lithuanian-produced French fries Estrella, confectionery products under the brand name of Karuna and other confectionery products were being exported to Latvia, Estonia, Poland, Belarus, Russia, Ukraine, Bulgaria, Macedonia and Kazakhstan last year.
The annual sales of Kraft Foods Lietuva declined by 3 percent in 2002. According to the management of the company, the sales in drop was registered because of the rising price of cocoa beans, expensive Lithuanian sugar and slack growth of the purchasing power. However, the company finds 2002 a successful year, as it succeeded in retaining the leader's position in all the market segments (confectionery products, coffee and chips) in Lithuania and Latvia.
(Lietuvos Zinios, Lietuvos Rytas)

Losses of companies decrease the profit of credit insurers
Turnover of the credit insurer Lietuvos Draudimo Kreditu Draudimas (LDKD) grew by 21 percent over the first quarter of this year, yet the company posted a 20-percent lower profit if compared to the respective period last year.
"The drop in profit was predetermined by the losses of the insured companies. Over the first quarter of this year, we paid some LTL 2.2 million in claims", the head of LDKD, Algirdas Balciunas, indicated the reason.
Over the three months of this year, LDKD wrote LTL 3.9 million in credit insurance premiums. As of April 1, 2003, turnover of companies insured by LDKD exceeded LTL 1.1 billion.
Over the first quarter, the company earned an unaudited net profit of LTL 302 thousand, a decline of 20 percent if compared to the respective period last year.
(Verslo Zinios)

Profit of Lietuvos Telekomas shrank
Lietuvos Telekomas (LT) announced a net profit of LTL 2.033 million for the first quarter of this year, a drop of 10.5 times from LTL 21.408 million in January-March of 2002. Excluding LTL 1.5 million worth of revenues received after re-calculation of customer payments and LTL 5 million worth of additional costs related to redundancy, Lietuvos Telekomas' net profit fell by 60.3 percent to LTL 8.501 million.
"In the first quarter of this year, we continued to face competition from the country's mobile operators and had some new competitors in the international calls segment. As a result, Telekomas lost a number of customers and, consequently, revenues," Tapio Paarma, CEO of Lietuvos Telekomas, said when commenting the results. However, he believes that revenues will grow in the upcoming quarters and the clients' number will be more stable.
According to Paarma, increasing revenues from the internet and data transmission sector will enable the company to stabilise its revenues. Paarma remarked that Lietuvos Telekomas has implemented a big investment program over the last five years.
The company's revenues amounted to LTL 203.956 million, down by 17.7 percent year-on-year. Revenues from fixed-line services declined by 25.3 percent to LTL 158.629 million, which caused a drop in overall sales.
(Respublika, Lietuvos Zinios, Lietuvos Rytas)

Monday 28th of April, 2003

Naujoji Ringuva to wash Americans
AB Naujoji Ringuva, the producer of soap and other hygiene products, has sent a consignment of shower gel and soap to the USA. In May, the company will be negotiating for regular collaboration and larger orders.
Vytautas Meistas, the CEO of Naujoji Ringuva, is delighted that payments will be made in euros; therefore, the Lithuanian company will not have to worry about the currency fluctuation.
This year, Naujoji Ringuva has also signed another big contract; 42 tons of household soap have been exported to Finland. Under the order of Henkel, Naujoji Ringuva started making production with the Scandinavian trademark. In total, Naujoji Ringuva will send 140 tons of household soap for LTL 0.5 million to Finland.
Last year, Naujoji Ringuva reported profit for the first time. The company earned LTL 0.682 million from its base activities, yet, the net profit made only LTL 251 thousand after having written off the old debts.
(Verslo Zinios)

Lithuanian energetic sector might fully depend on Russia
After the Ignalina Nuclear Power Plant (INPP) is closed, Lithuania might need to buy not only natural gas and oil but also electricity from Russia.
Jurgis Vilemas, the head of Lithuanian Energy Institute, claims that the fear is exaggerated. According to Vilemas, Russia's plans to expand its nuclear energetic are utopian, as construction of new reactors requires huge investments while Russia is unable to attract them due to the low electricity price in the country. Vilemas believes that after INPP is closed, Lithuania is likely to import electricity from Poland.
Although the Lithuanian national energy strategy anticipates that the country will get electricity through modernising its thermal plants, specialists and businesspeople doubt if the energy is enough for the expanding Lithuanian industry.
According to preliminary estimations, Lithuania's demand for electricity will make some 14 billion kWh in 2010 (the real demand might in fact be much higher) while Lithuanian plants will be able to produce only 13.4 billion kWh after the INPP is closed. Electricity import from Scandinavian countries would be too expensive, moreover, Finland, Sweden and Norway feel the lack of electricity, too; last year, the countries had to import electricity themselves.
(Lietuvos Zinios)

Lithuanian credit unions have posted profit
Credit unions operating in Lithuania announced an aggregate profit of LTL 42,500 for the first quarter of this year, up by 42.5 times from the figure a year earlier.
Some 39 credits unions operated at a profit and earned a total of LTL 187,500 in January-to-March, while 24 credit unions posted an aggregate loss of LTL 145,000.
In 2002, credits unions reported an aggregate profit of LTL 414,200, the best results since the restoration of Lithuania's independence.
The total assets of the country's credits unions grew by 17.3 percent, year-on-year, to LTL 82.255 million, representing 0.48 percent of the total commercial banks' assets as of April 1. The credit unions' total loan portfolio increased by 18.5 percent to LTL 54.391 million, their deposits rose by 16.3 percent to LTL 65.741 million and their equity capital grew by 15.7 percent to LTL 8.732 million in the three months.
(Respublika, Verslo Zinios)

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