Observer "Lietuva"

WEEK 21st

Saturday 24th of May, 2003

Optimistic Snaige' prognosis
The largest manufacturer of refrigerators in the Baltic states, AB Snaige, is celebrating its 40th anniversary this week. The company employs 1.9 thousand people and has expanded its assortment from 2 models up to several hundreds since the establishment of the company in 1963.
New technologies allowed the company to consolidate its position in the international markets. Snaige sells only some 8 percent of its production in the local market while the rest of production is exported. On the average, the company invests some LTL 6 million into new technologies per year.
Last autumn, General Frost company in Slovakia that is controlled by Snaige won the sales tender of the bankrupted fridge factory Novy Calex and acquired the licence of its trademark. Snaige plans to launch manufacture of fridges and car parts in Slovakia this year. Moreover, Snaige started constructing a new fridge factory worth LTL 40 million in Kaliningrad. Investments into technologies and equipment might account for LTL 17 million.
(Lietuvos Zinios)

Lithuania bans import of animal production
On Friday, Lithuanian State Veterinary Service introduced a temporary ban on imports of all animals, animal products, raw material and feedstuff from Finland, as well as on transit from Finland of above products via Lithuania and annulled all previously issued permissions.
The decision taken after the May 22 letter from Finland's Agriculture and forestry ministry informing about the suspected cases of foot and mouth disease in this Scandinavian country, the State Veterinary Service reported.
Lithuania imported 22 tons of pork, 200 tons of animal subproducts and 192 tons of poultry from Finland in January-April this year.
(Respublika, Lietuvos Rytas)

It is offered to cut prices on natural gas
Lietuvos Dujos (Lithuanian Gas), the natural gas company in the process of privatization, has offered to lower natural gas prices for households and small commercial consumers by 8 percent on average starting July 1, as the price it pays for Russian gas keeps falling due to the US dollar's continued weakness.
Lietuvos Dujos submitted its proposals regarding the natural gas prices to the National Control Commission for Prices and Energy on Friday. The commission is expected to analyze the prices and take a decision next Thursday. Lietuvos Dujos must announce the new prices to consumers by June 1 at the latest.
If the regulator approves Lietuvos Dujos' proposals, the company will reduce natural gas prices for all regulated consumers, particularly those using more gas.
(Kauno Diena, Lietuvos Zinios, Lietuvos Rytas, Respublika)

Friday 23rd of May, 2003

Insurance market grew by 12.9 percent
Lithuania's direct insurance market grew by 12.9 percent in the first four months of 2003, compared to the same period last year, with total written premiums reaching LTL 339.416 million.
Non-life insurers wrote LTL 272.477 million of premiums during the four months, a 3.7 percent rise in year-on-year terms. This accounted for 80.3 percent of the overall premiums. Life insurance premiums soared by 76.7 percent to LTL 66.939 million, representing 19.7 percent of the total volume.
The slowdown in the non-life insurance market was attributed to a considerable decline in the number of mandatory motor third-party liability insurance contracts. Excluding mandatory auto insurance premiums from the overall figure, the non-life market showed a 53.2 percent growth rate in the four months of this year.
Insurance claim payments accounted for LTL 101.078 million in the January-April this year, a 28.1 percent increase year-on-year. Non-life insurers paid out LTL 89.352 million in claims (up by 48.4 percent), while life insurers paid out LTL 11.726 million in claims (down by 37.3 percent).
(Respublika, Verslo Zinios)

Laptops to increase sales volume
Over the four months of this year, the computer wholesaler Acme Kompiuteriu Komponentai (ACC) sold hardware for LTL 15 million, a rise of 38 percent if compared to the respective period last year when the figure made LTL 10.8 million
"Sales volume is likely to grow due to laptops; in May, we have launched sales of Asus laptops that are assembled in Lithuania", Regimantas Buozius, the head of ACC, says.
The company is planning to sell some 200 laptops this year.
(Verslo Zinios)

Factoring market is gaining speed in Lithuania
The international factoring association Factors Chain International (FCI) has registered increasing volume of factoring (financing of trade and current assets) emphasizing that the financing tool is growing in the Baltic States the most rapidly. In 2002, turnover of factoring grew by 54 percent in Lithuania while the turnover for the first quarter of this year made almost 32 percent of the overall turnover for last year (LTL 536.43 million).
The overall factoring market in Estonia, Lithuania and Latvia accounted for EUR 2.2 billion in 2002.
Players of the Lithuanian factoring market are delighted that factoring has consolidated its position and is a competitive product among other alternative ways of current assets financing. Factoring services have got twice cheaper since the period they were introduced.
(Verslo Zinios)

Thursday 22nd of May, 2003

They would like to built a nuclear power plant
The French Areva Group has said it could build a new nuclear reactor for Lithuania in less than five years, in case the country decides to remain a nuclear power producing country after the decommissioning of the Ignalina Nuclear Power Plant (INPP).
"It should not take more than five years to finish the construction of the reactor, perhaps even less", Anne Lauvergeon, chairwoman of the Areva Group's board of directors, says.
Lauvergeon came to Vilnius to sign a letter of intent to cooperate with the Lithuanian government in the nuclear energy sector. Lauvergeon would neither comment on how much it would cost to construct a new nuclear reactor in Lithuania nor say how much the Areva Group could invest in this project, saying that no decisions have been made yet as to the type of the reactor and its capacity.
Lithuania has not decided yet whether or not it will remain a nuclear power producing country after the decommissioning of the INPP. The INPP has generated 75 percent to 80 percent of Lithuania's electricity in recent years. Lithuania exported 50 percent of its electricity output in 2002.
(Lietuvos Rytas, Lietuvos Zinios)

The list of unreliable companies
The State Tax Inspection (STI) is publishing a list of unreliable companies on its website . "We do not want to evaluate legality of the companies' activities; we just want to draw attention to the facts that allow doubting in the reliability of the companies. The companies that will eliminate the shortages, will be immediately withdrawn from the list", the Tax Inspection says in its statement.
STI representatives say that they often see that some companies retrieve VAT illegally or violate laws in other ways.
(Kauno Diena)

Hungarian CBA is likely to merge with Aibe
The second biggest Hungarian retail trade CBA Kereskedelmi (CBA) has expressed a wish to merge with the Lithuanian trade chain Aibe.
CBA presented the merger offer during the visit of CBA's owner and observers' board chairman Zoltan Dienes and an international relations director Katalin Major in Lithuania in May. During the visit, heads of CBA got acquainted with the strategy of Aibe stores and analysed the chain's level.
Natural persons related to Vilniaus Prekyba established Aibe in 1999. At present, Aibe unites 375 food stores in Lithuania and 180 stores in Latvia.
Egidijus Aleinikovas, the director of Aibe retail chain, believes that the complete merger with CBA would be complicated but strategic partnership is quite possible and should be developed.
Last year, CBA's turnover amounted to HUF 350 million (LTL 4.9 billion), a 20 percent rise year-on-year.
(Lietuvos Zinios, Respublika)

Wednesday 21st of May, 2003

TV advertisement dictate
According to the data provided by SIC Gallup Media, advertisement volume grew at a rapid pace in televisions and magazines over the first four months of the year. In January-April, the area of advertisements in magazines made 1.6 million square centimetres, a rise of 28.6 percent if compared to the respective period in 2002 while Lithuanian televisions broadcasted 1.995 million seconds of advertisement, a rise of 22.6 percent. Excluding Tango TV, observation of which was launched in April last year, the overall advertisement volume in televisions grew by 17.8 percent up to 1.908 seconds.
Although Ricardas Suminas, the head of the Media Management Department at VRS Reklamos Agentura, claimed in September 2002 that televisions are likely to raise advertisement tariffs by 40 percent, yet they in fact set 50-percent lower tariffs.
Companies ordering advertisement in televisions say that have noticed no changes, as official price lists differ considerably from the final contracts. Specialists' estimations have also revealed that advertisement volume in seconds grew by some 15 percent while income for it increased by only 6 percent.
According to Verslo Zinios business daily, the most popular Lithuanian televisions LNK and TV3 keep violating the Advertisement Law broadcasting larger advertisement blocks than it is stipulated by the law and doing it too frequently.
The advertisement policy of commercial televisions distorts the Lithuanian advertisement market and violates interests of other players. Although the state economy has reached the impressive growth of 9.1 percent for the first quarter of this year and businesspeople say they spend more money on advertising, most media companies incur losses.
SIC Gallup Media reported that advertisement volume in radio stations dropped by 6.5 percent down to 600,000 seconds in January-April if compared to the respective period in 2002 while advertisement area in newspapers shrunk by 0.9 percent to 7.8 million square centimetres. Outdoor advertisement declined by 24.5 down to 53,000 square centimetres. According to SIC Gallup Media, the overall Lithuanian advertisement market grew by 17.3 percent in 2002 and reached LTL 232 million.
(Verslo Zinios)

Greenhouse for oil companies
Although the president of Lithuania Rolandas Paksas had put a veto on the amendments of the Oil and Gas Taxation Law, the Seimas approved yesterday the amendments stipulating that the state will cover half of expenses invested for oil prospect if new oilfields are found. This would increase profit for oil companies even more and reduce income of the state budget. According to preliminary estimations, the state budget will not receive income of LTL 7 to 45 million due to the amendments.
Last year, LTL 100 million were paid to the state budget in oil and gas taxes.
Minijos Nafta paid the largest sum: the company transferred LTL 56.7 million and LTL 33.2 million to the state budget in 2001 and 2002 respectively.
(Lietuvos Rytas, Lietuvos Zinios, Kauno Diena, Respublika)

One of the largest biotechnological companies in Lithuania Fermentas that sells majority of its production abroad reported turnover of LTL 7.901 million for the first quarter of this year, a rise of 13 percent if compared to the respective period last year when the figure made LTL 6.99 million.
The company posted a profit of LTL 2.525 million for January-March, a decline of 11.7 percent from the first quarter in 2002 when it earned a profit of LTL 2.865 million.
(Lietuvos Rytas)

Tuesday 20th of May, 2003

Insurers collected fewer premiums from drivers
Experts believe that the record low premiums of the motor third party liability insurance (MTPLI) will start growing this year. According to the data provided by the State Insurance Supervisory Authority, MTPLI premiums collected by Lithuanian insurance companies in January-May this year accounted for LTL 120 million, a decline of 25 percent if compared to the same period last year.
The largest Lithuanian insurance company Lietuvos Draudimas signed MTPLI premiums for LTL 42.456 million in January-April and occupied 35.6 percent of the market. MTPLI premiums collected by Ergo Lietuva dropped by 46.4 percent over the period while the company's share in the market shrank by 5 percent. Meanwhile, premiums signed by Baltikums Draudimas rose by 21.7 percent.
The sum of premiums signed by Lindra increased by 5.1 percent in January-April up to LTL 11.865 million while that of LZUB Draudimas stood almost steady and constituted LTL 10.955 (9.2 percent of the market).
(Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios)

Wholesalers anticipate growth
The four largest Lithuanian computer wholesalers are anticipating growth of their turnovers for this year. GNT Lietuva is planning to reach turnover of LTL 315 million for 2003; last year, the figure made LTL 258 million. The company's turnover accounted for LTL 53.12 million for the first quarter of this year and was by 11 percent higher if compared to the respective period last year (LTL 47.71 million). Evaldas Rekus, the manager of commerce at GNT Lietuva, says that demand for LCD monitors has considerably increased this year – sales volume of LCD monitors was by 4.3 times higher from the first quarter last year. Meanwhile, sales of CRT monitors grew by only 3 percent over the period. GNT Lietuva forecasts that the overall Lithuanian IT market will grow by 20-25 percent in 2003.
Tech Data Lietuva is planning to reach turnover of LTL 100 million for this year, similar to that of last year. Over the first quarter of its financial year, the company boosted its turnover by 17 percent if compared to the respective period in 2002.
Elko Kaunas is anticipating turnover of LTL 75-80 million for this year; the turnover accounted for LTL 55.1 million in 2002.
Acme Kompiuteriu Komponentai (ACC) is planning to reach LTL 75-million turnover for this year. In 2002, the company sold production for some LTL 50.5 million. ACC sales accounted for LTL 15 million for January-April this year.

The state budget failed to receive 1.4 percent of the anticipated revenues
Lithuania's national budget made LTL 3.344 billion in January-April of this year, or 1.4 percent less than it had been anticipated. The national tax inspection and the customs had forecasted the budget revenues of LTL 3.392 billion for January-April.
In January-April, the state budget fell short of LTL 29 million (1 percent) of planned revenues. The revenues of the state budget during the first four months accounted for LTL 2.857 billion compared to the plan of LTL 2.885 billion.
The state budget revenues for the four months accounted for 29.9 percent of the projected annual revenues, the national budget collected 30.1 percent of the plan, the revenues of municipal budgets accounted for 31.5 percent from the plan for 2003 (LTL 487.3 million).
It is planned that national budget will collect LTL 11.092 billion of revenues this year; the projected target for state budget is LTL 9.545 billion.
(Respublika, Lietuvos Zinios)

Construction volume rose by almost 20 percent
Over the first quarter of this year, Lithuanian construction companies implemented works for LTL 488.8 million, a rise of 19.5 percent if compared to the respective period last year. The Department of Statistics says that the growth was predetermined by rapid expansion of new constructions and reconstructions.
In January-March this year, new constructions constituted 41.3 percent of the construction market; reconstruction made 27.5 percent, redecoration - 26.9 percent and other works - 4.3 percent of the market. Majority of works were implemented in Vilnius, Kaunas and Klaipeda regions (76.8 percent).
Over the first quarter of this year, 465 new blockhouses (or 938 flats) were built in Lithuania, 194 flats more if compared to the first quarter last year.
(Verslo Zinios)

Monday 19th of May, 2003

Pioneers of logistics consulting business to settle in Kaunas
Kaunas-based IT company UAB Equinox Europe is planning to run logistics consulting business. The company says that since working power is quite cheap, companies do not save on storehouses; UAB Equinox Europe will be offering 'economically' projected storehouses.
"We started selling control systems for storehouses in the Baltic states in 2002 and we noticed that there was a lack of specialists that could design storage processes while construction companies usually relied on architects", Rasa Beskajevien, the head of UAB Equinox Europe, explained.
The company is going to design storehouses and run business related to logistics.
Nerijus Celkonas, the head of the logistics company UAB LEX System, says that there are no logistics specialists in Lithuania. "I believe that logistics consultation market will have a bright future in Lithuania. Yet, presently Lithuanian companies are not ready to pay for the services", Celkonas said.
(Verslo Zinios)

Profitable quarter for TV-set manufacturers
Siauliai-based manufacturer of TV sets, UAB Siauliu Tauro Televizoriai (STT), sold 46-percent more TV sets over the first quarter of this year if compared to the respective period in 2002; the company posted a Q1 pre-tax profit of LTL 0.9 million.
STT' Q1 turnover accounted for LTL 41.9 million, a rise of 45 percent from the first quarter last year when the figure made LTL 28.845 million.
Before Christmas, the company is planning to sell 35 percent of the overall amount of TV sets anticipated for 2003; Siauliu Tauro Televizoriai is going to raise its annual turnover up to LTL 211 million this year. In 2002, the figure made LTL 117.7 million.
(Verslo Zinios)

Butinge oil terminal needs new reservoirs
Lithuanian oil refinery Mazeikiu Nafta (Mazeikiai Oil) is going to establish three more oil reservoirs in the area of Butinge oil terminal, capacity of which will make 50 thousand cubic metres each. The company needs additional reservoirs because of the frequent oil outage in pipelines.
It takes three days to fill the company's reservoirs, overall capacity of which makes 150 thousand tons.
Tankers at Butinge are not loaded 85 days per year because of bad weather. The additional reservoirs would enable to reduce the losses caused by the outages.
In 2002, 6.234 million tons of oil were transported from the terminal; the company loaded 61 tankers. Thanks to good weather, almost 4 million tons of oil were exported in January-April this year; 39 tankers were loaded.
(Lietuvos Rytas)

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