Observer "Lietuva"

WEEK 24th

Saturday 14th of June, 2003

Banana importers – against the European Committee
Lithuanian fruit and vegetables importers buy bananas through broker companies, usually German ones that ship the exotic fruit to Klaipeda seaport. Last year, 36.4 thousand tons of bananas worth LTL 55.8 million were imported to Lithuania; 20 thousand tons were re-exported while the rest was consumed in the Lithuanian market.
However, following the EC regulations, only traditional importers that have been buying bananas directly from growers for at least three years will share the 87 percent of the privileged banana import quota in the European Union. Laimute Grybauskaite, the president of the Lithuanian Association of Fruit and Vegetables Companies, says that Lithuanian companies will have to cancel their activities following the regulations of banana import to the EU countries after Lithuania's accession to the EU.
The Lithuanian association Vaisiai ir Darzoves (Fruit and Vegetables) has addressed the Ministry of Agriculture, the Seimas, the European Committee and other institutions asking to start negotiations with the EC immediately and protect rights of the Lithuanian banana importers.
(Lietuvos Zinios)

Money supply drops by 1.3 percent
According to the analytical balance provided by the Bank of Lithuania, money supply accounted for LTL 5.2 billion as of the end of May, a decline of LTL 67.5 million, or 1.3 percent if compared to April. Commercial banks' funds in correspondent accounts and the foreign currency reserves shrunk by LTL 187.5 million and by LTL 11.3 million in May, respectively. The volume of cash in circulation grew by LTL 132.1 million.
Foreign assets and government deposits declined by LTL 147.7 million and LTL 10.5 million respectively. Foreign assets dropped by LTL 122.1 million due to operations with central government institutions. Foreign assets rose as the sum of the foreign exchange that the central bank's bought from commercial banks exceeded the bank's selling of foreign exchange by LTL 34.2 million.
(Respublika

Evaluation
The International Monetary Fund (IMF) has given good marks to Lithuania's economic performance but warned the country's government that delays in reforming the healthcare system, as well as in tackling social inequality and shadow economy, may lead to serious troubles in the long run.
"Lithuania's economy is functioning well and the outlook is good if the right policies are implemented in the future," Patricia Alonso-Gamo of the fund's 2nd European Department said in the press conference.
(Lietuvos Rytas)

Friday 13th of June, 2003

Spice traders to expand their market in the Baltic States
UAB Moguntija Baltija, the joint Lithuanian and Swiss company that sells spice and food additives, keeps investing into its further development. The company that controls some 20 percent of the Lithuanian market is going to increase its sales and consolidate its position in Estonia and Kaliningrad region. Presently, UAB Moguntija Baltija is constructing a storehouse in the suburbs of Klaipeda, which would expand area of storage by 25 percent. The company allotted LTL 1.2 million for the construction of the storehouse and its office building. UAB Moguntija Baltija sells 95 percent of its production to meat processors. The company boosts its sales by 30-40 percent every year. This year, the company anticipates a slower 5-percent growth due to the increased sales of raw meat.
Arturas Seimys, the head of UAB Moguntija Baltija, says that there is a fierce competition in the Lithuanian spice market, as 15 companies are operating there.
(Verslo Zinios)

A woman or a man – which one to employ?
According to the data provided by the Department of Statistics, women's occupation rate makes only 44.7 percent and is by 7.5 points lower than that of men. The occupation rate is extremely low among women of pre-retirement age. The average unemployment rates among men and women are similar – 11.4 and 11.3 percent respectively, yet in rural areas, there are more unemployed women.
According to the statistics, two-thirds of occupied women (65.9 percent) are employed in the sector of services; 16.1 percent work in educational system, 14.6 percent – in trade, transportation and house appliances repairs and 11.7 percent – in healthcare and social sectors. Only 18.8 percent of women are employed in processing industry and 12.3 – in agricultural sector.
The average women's salary makes only 82.2 percent of the average men's salary in Lithuania.
(Respublika)

Ekranas received a payout of LTL 50 million
Lithuanian manufacturer of colour TV tubes Ekranas has received an insurance payout of LTL 42.2 million from Zurich Draudimas (Zurich Insurance) this year for damages caused by a fire last October. In early October 2002, the fire damaged the section of the plant that was being prepared for installation of a new large-diameter flat picture tube assembly line, which had been purchased from Japan's Hitachi. Reconstruction work at the fire-damaged unit was completed in May.
Ekranas planned to invest USD 35 million in the large-diameter picture tube production project, with USD 5 million dollars to be invested in 2002, and the remaining USD 30 million in 2003. The plan was to start the production of new 25-inch, 28-inch and 29-inch flat screen TV tubes in 2004.
(Kauno Diena, Verslo Zinios, Lietuvos Rytas)

Telecom is looking for efficiency recipes
AB Lietuvos Telekomas has confirmed the information published in Verslo Zinios in early May about the planned dismissal of employees and is going to cut the staff number by a fifth by the end of the year. It is planned to reduce the employees' number from the current 4,140 to 3,400.
According to the telecom, after assessment of the operational results, it was decided to improve performance efficiency of the structural units of Lietuvos Telekomas' group by regulating the number of the staff.
In the first quarter of this year, LT revenues shrank by 17 percent year-on-year, down to LTL 203.965 million. The company's net profit declined 10.5 times, to LTL 2.033 million. 25.3 percent drop in LT turnover has been preconditioned by the reduced revenues (LTL 158.629 million) from the fixed-line sector.
In 2002, Lietuvos Telekomas dismissed a fifth of employees and the related company's expenses were 20.5 percent smaller than in 2001.
(Verslo Zinios, Respublika, Lietuvos Rytas)

Thursday 12th of June, 2003

Export shrank in April
In April, Lithuania's exports fell by 16.4 percent and the imports shrank by 1.2 percent, year-on-year, due to the decline in trade with the EU and some CIS countries. Compared to March exports and imports declined by 15.8 percent and 3 percent respectively.
Lithuania's exports grew by 13.6 percent and imports rose by 6.4 percent in January-April this year, compared to the same period of the previous year. Lithuania's total export volumes in four months reached LTL 6.962 billion, while import accounted for LTL 9.166 billion.
Lithuania's foreign trade balance was negative in January-April and made LTL 2.224 billion, an 11.2 percent drop from the figure last year.
(Lietuvos Zinios, Respublika, Verslo Zinios)

Drinks might get more expensive due to new taxes
The Ministry of Agriculture together with sugar producers are attempting to increase sugar consumption that has been going down in Lithuania recently. They have asked the government to apply a sugar tax on imported syrup, sugar substitutes and other products that contain sugar. If the government approves the offer, soft drinks, beer and part of confectionery production will get more expensive.
They say that this is the way the state might avoid large expenses in the future. Rimantas Stulgys, the president of the association of sugar industry companies, Cukrus (Sugar), says that after Lithuania's accession to the EU, the country will be allowed to store up to 5-10 thousand tons of sugar. Meanwhile, the sugar surplus reached 90 thousand tons at the end of May. In 2002 alone, sugar factories did not sell 28,000 tons of sugar and the state will have to export sugar, which is detrimental.
"We ask to tax inulin, isoglucose, fructose and some other products that are customable and have quotas in the EU, yet they are freely imported to Lithuania, as we are not the EU members as yet", Saulius Janusonis, the head of sales department in Panevezio Cukrus, says.
In January-May 2003, if compared to the same period last year, sugar consumption declined by 9.5 percent down to 26,800 tons.
(Lietuvos Zinios)

Venezuela orimulsion against Russian gas
Lithuania's government acknowledged orimulsion an alternative fuel in November last year; therefore, separate permission for its import is not required. Over the trial period in 1995-2002, Lietuvos Elektrine (Lithuanian Power Plant) burnt 270.5 thousand tons of orimulsion; results of the experiment have revealed that orimulsion is a perfect alternative to fuel oil or gas. The power plant signed a long-term orimulsion supply agreement with the Great Britain's Bitor Europe. One of the largest gas consumers, the heat supplier Vilniaus Energija, is going to use orimulsion, too.
Presently, orimulsion is used only in a single block that has an ash catcher; they are presently constructing sulphur elimination equipment for LTL 40 million there, too.
Viktoras Mekas, the head of Lietuvos Elektrine, says that gas is dominating, as it is the cheapest fuel, yet the power plant also uses 50 to 100 thousand tons of orimulsion.
In order to use orimulsion in the remaining 7 blocks of the power plant, Lithuania is planning to ask for EUR 151-million support from the European Union.
(Veidas)

Wednesday 11th of June, 2003

Sales of SBA group companies rose by a third
Lithuanian furniture manufacturers Klaipedos Baldai, Baldutura, Kauno Baldai, Silutes Baldai, Karige and Akmena that are controlled by Kaunas-based concern SBA, reached turnover of LTL 104.79 million for January-May, a rise of 34.1 percent if compared to the same period last year when the figure made LTL 78.134 million.
The 5-month turnover of Klaipedos Baldai increased by 53.1 percent up to LTL 42.05 million; Silutes Baldai boosted its turnover by 33.3 percent up to LTL 29.427 million, Kauno Baldai – 6.3 percent to LTL 15.985, Karige – 44.7 percent to LTL 10.92 and Akmena – 22.8 percent to LTL 5.182 million. Turnover of Baldutura that has been recently acquired by the concern, declined by 31 percent down to LTL 1.226 million.
In 2002, SBA-controlled companies reached a consolidated turnover of LTL 198.133 million, a rise of 20 percent from the previous year.
(Kauno Diena, Verslo Zinios, Lietuvos Rytas)

ELTA posted profit
The income of the Lithuanian news agency ELTA declined by 40 percent in 2002, however the agency earned a net profit of LTL 289,400 and reduced the core operations losses by 1.8 times to LTL 153,800. ELTA reported an income of LTL 1.832 million for 2002, compared to LTL 3.064 million in 2001.
The agency's losses from operations last year came to LTL 527,800, 39.6 percent up from LTL 378,051 in 2001.
ELTA's losses from operations in 2002 were softened by LTL 347,700 of income received from the premises rent. Part of the premises controlled by the newsagency is rent to MG Baltic Investment.
After the Estonian company Mecom Grupp finished reconstruction of the premises where a casino is established, value of the building of the news agency rose by LTL 428,900, which allowed the company to end the year with a profit.
(Verslo Zinio)

Insurers are looking for representatives in Europe
After the General Assembly of the Green Card Bureau decided to invite Lithuania into the Green Card insurance system, Lithuanian insurance companies started knitting a claim regulation chain in Europe.
Lithuanian insurance companies that have been distributing the green card insurance of other countries so far will be able to start selling the Green Cards beginning October. Yet, there is a requirement that they need to have their representatives for claim regulation in each country that belongs to the Green Card System. That is why ERGO Lietuva has signed an insurance agreement with one of the largest insurers in Europe, Victoria that has been the first to receive the quality certificate DIN EN ISO 9001.
(Respublika)

Tuesday 10th of June, 2003

Rinkuskiai to invest into beer bottling line
The biggest brewery of the Lithuanian capital, Rinkuskiai, is planning to launch a beer bottling line this year and use glass bottles. Presently, the brewery bottles beer into plastic bottles and kegs. Sigitas Kalkys, one of Rinkuskiai owners, says that investments into the new bottling line will make LTL 2.5 million. According to Kalkys, the brewery bought the new line in order to take better position in the light beer market.
In January-May, Rinkuskiai sold 2.81 million litres of beer, a decline of 11.9 percent if compared to the same period last year.
Rinkuskiai is the fifth biggest brewery in Lithuania in terms of the sales volume; it presently controls 3.2 percent of the Lithuanian beer market.
(Respublika, Verslo Zinios, Lietuvos Rytas)

Two new Hansabankas' services have been implemented
Hansabankas has presented a new product for its clients – a special financing system for students; besides, the bank will soon launch a new service at hanza.net – the system of securities trade, Investuotojas (Investor).
"Financing of students in Lithuania is developed worse than in other Baltic countries. The market research revealed that some 30 percent out of 140,000 college and university students pay for their studies themselves and 14 percent (some 20,000 students) lack money to pay for studies", Jurate Gumuliauskiene, the head of Hansabankas Individual Customers Financing Department, says. According to the data of Busto Paskol? Draudimas (Housing Loans Insurance), loans for LTL 1.428 billion have been taken from Lithuanian commercial banks as of May 1 this year; housing loans made 80.22 percent.
"Over 1 year and 4 months, volume of loans has doubled, which shows that the market keeps growing at a rapid pace", Gumuliauskiene says.
Over 5 months of this year, Hansabankas issued the largest part of loans – LTL 411 million – and took 30 percent of the market. Vilniaus Bankas is leading in terms of the overall number of the loans issued so far – 31 percent.
(Verslo Zinios, Lietuvos Zinios, Lietuvos Rytas)

Liepsna will set fire for Jews
Kaunas-based producer of matches AB Liepsna is looking for untraditional markets to sell their production; in May, a container with 20 million matchboxes will be sent to Israel. The company has plans to thrust into the Nigerian market, too.
"Export to Israel is expected to make some 6-7 percent of the overall company's export this year; we have signed an agreement with a purchaser in Israel and we will send a container with matches every two months", Tomas Deltuva, the marketing manager of AB Liepsna, says.
Presently, export makes some 80 percent of the turnover in Liepsna. The company mostly sells its production in Latvia, Poland, Russia and Ukraine.
Managers of the company believe that this year, the company's turnover will be by 20 percent higher than that of last year.
(Verslo Zinios)

Monday 9th of June, 2003

Paroc Group to increase investments
Paroc Group is planning to invest more than EUR 20 million in Lithuania – the second production line will be soon assembled at its secondary company, Paroc. Managers of the concern say that the factory cannot satisfy needs of the growing market.
UAB Paroc that is celebrating its 10th anniversary produces some 30,000 tons of stone wool per year. Production volume of the new line is 40,000 tons. They forecast that the investments of EUR 20 million would pay back soon, as the first line, investments into which made LTL 74 million, paid back within 3 years.
Paroc sells some 50 percent of its production in the local market while the rest is exported to Latvia, Estonia, Ukraine, Kaliningrad region and Belarus.
In the Baltic market, Paroc's production controls 50-65 percent of the insulators market.
The company employs 140 people; its annual turnover exceeds LTL 50 million.
(Verslo Zinios)

Internet banking
It is forecasted that number of internet banking users should increase at least 1.5 times this year. In 2002, the number increased more than 5 times. At the beginning of last year, there were some 62 thousand internet banking users while recently the number made 323 thousand at the beginning of this year.
Hansabankas and Vilniaus Bankas are the leaders of internet banking market in Lithuania. As of the beginning of this year, 183 thousand people were using hanza.net services while Vilniaus Bankas had 119 thousand clients.
(Lietuvos Rytas)

Oil reduced industry production prices
According to the data provided by the Department of Statistics, price of industry production declined by 2.9 percent in May this year if compared to April. The drop of oil prices affected the price index the most. If the oil industry were excluded, the drop of production prices would make 0.7 percent.
Prices of industry production sold in the local market declined by 1.2 percent.
(Verslo Zinios)

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