Observer "Lietuva"
WEEK 33rd

Saturday 16th of August, 2003

Vilniaus Bankas' profit declines
Lithuania's Vilniaus Bankas group, owned by the Swedish banking giant SEB, earned LTL 58.182 million in net profit in the first half of 2003, posting a decline of 8.9 percent versus the first half of 2002 when the group reported profit of LTL 63.841 million.
Vytautas Bucas, the head of the Finance and Accountability Department at Vilniaus Bankas, says that the result was predetermined by lower interest rates applied on loans and smaller interest margins. However, according to the bank's representatives, profit of Vilniaus Bankas exceeded the target one by 4 percent.
As of the end of June, assets of the bank reached LTL 6.585 billion, shrinking by 0.8 percent from the beginning of the year. Deposits declined by 2.5 percent down to LTL 4.467 billion, while the loan portfolio expanded 8.9 percent to LTL 3.443 billion.
The bank controlled a 39.1 percent share of domestic loan market and 36.7 percent of local deposit market as of the end of June.
(Lietuvos Zinios, Lietuvos Rytas)

Milk processors to expand their domains
One of the largest Lithuanian milk processors, Rokiskio Suris, asked the Competition Council for permission to acquire up to 100 percent of shares in Alytus milk purchase station Kalora.
Dalius Trumpa, the production manager at Rokiskio Suris, says that Kalora has been selling purchased milk only to Rokiskio Suris for several years already. Presently, Rokiskio Suris has some 200 milk purchase stations.
The company posted an unaudited net profit of LTL 4.916 million for the first half of this year and a consolidated unaudited turnover of LTL 168 million. Last year, the figures made LTL 6.806 million and LTL 168.166 million respectively.
(Lietuvos Rytas)

Half of the grain harvest is reaped
As of the beginning of this week, 335.6 thousand hectares of grain and rapes harvest, which is almost 50 percent of the overall area of the declared crops, was reaped.
Specialists of the Ministry of Agriculture and Food Department organised a meeting with grain growers in order to evaluate grain realisation problems. Presently, LTL 340-370/t are paid for the fist-grade wheat, LTL 320-340/t of the second-grade wheat and LTL 300/t of barley.
Specialists of the Ministry of Agriculture forecast that grain prices will be growing; EU countries are likely to lack grain due to longstanding drought. Lack of grain is anticipated not only in Western Europe but also in Russia and Ukraine.

Thursday 14th of August, 2003

Vilkyskiu Pienine
One of the largest cheese producers in Lithuania, Vilkyskiu Pienine reported turnover of LTL 27.9 million for January-July this year, an increase of 9 percent if compared to the respective period in 2002. The company's income from export made LTL 17.4 million, a rise of 13.7 percent from last year.
Vilkyskiu Pienine exports most of its production to the European Union, also Russia, the Baltic states, the USA and Israel.
(Lietuvos Zinios)

Loan market expansion boom is awaited
Analysts of the finance market say that an expansion boom in the loan market is awaited in Lithuania. The Lithuanian loan market is the most promising – number of residents and pace of borrowing are the highest in the Baltic states. Over the six months of this year, growth of the market made 30.95 percent while in Latvia and Estonia the figure accounted for 20.57 percent and 17.68 percent respectively.
In Lithuania, the four major players share the market of resident loans; as of July 1, Vilniaus Bankas controlled 30.1 percent of the market, Hansabankas had 29.3 percent, NORD/LB – 20.1 percent and Sampo bank – 11.1 percent. Other banks shared the remaining 9.4 percent of the market.
Finance analysts forecast that the market of loans for residents will grow by some 70 percent (LTL 900 million) in 2003; housing loans will rise by 65 percent (LTL 650 million) while consumer loan market will grow by 100 percent (LTL 250 million).
Loan portfolio of all banks operating in Lithuania thickened by 31.4 percent over the year and accounted for LTL 8.8 billion as of the end of June.
(Respublika, Verslo Zinios, Lietuvos Zinios, Lietuvos Rytas)

Some 200 meat processors will be able to work in the EU
Slightly more than a half of some 360 Lithuania's meat processors will meet the requirements, set for operations on the European Union market, upon Lithuania's accession to the European bloc.
"Some 162 companies will meet the target of adapting their manufacturing practices to the EU requirements. However, 37 companies have paid almost no attention to that. Some of those companies have already gone bankrupt or suspended operations due to financial problems" Darius Remeika, State Food and Veterinary Service Deputy Director, said.
Only 29 domestic meat processors, including 13 meat producers entitled to export meat products to the EU states, meet the EU requirements.
Some 60-70 meat processing companies were shut down in the first half of 2003, and the number of closures would grow to 156 meat processors by 2004, Remeika said.
Production of meat and meat products reached 67,600 tons in the first half of 2003, rising by 19.6 percent versus the January-to-June period of 2002.
(Kauno Diena)

Leaders of the brokerage market to merge
The two largest Lithuania's brokerage companies in the non-banking sector, Finasta and Sinkus, reported about their merger that is likely to be finished this year already.
After the merger, Finasta's own capital will grow by LTL 1 million up to LTL 8 million; number of employees will make 40.
Pre-tax earnings of Finasta made up LTL 2.25 million in the first half of 2003; the company controlled 26 percent of the share trade market. Income of Sinkus made LTL 1.2 million last year while the company's net profit exceeded LTL 70 thousand.
This year, Finasta is going to establish two new funds of shares and bonds investments as well as three pension funds.
(Lietuvos Rytas, Respublika, Verslo Zinios)

Wednesday 13th of August, 2003

Alita boosted its turnover by 3.4 percent
The to-be-privatised Lithuanian alcohol producer Alita posted turnover of LTL 48.402 million for the first seven months of this year, a rise of 3.4 percent if compared to the same period last year.
In July, if compared to July 2002, the company's turnover increased by 12.8 percent from LTL 9.484 million up to LTL 10.701 million, Vilmantas Peciura, the head of finance and administration in Alita, has reported.
According to Peciura, the growth of the company's turnover was predetermined by higher sales of alcohol cocktails, cider and vodka.
(Verslo Zinios, Lietuvos Zinios, Lietuvos Rytas)

Sonex is expanding
The largest Lithuanian IT company Sonex Grupe has registered its secondary company in Belarus, a free economic zone in Minsk.
"After having consolidated our positions in the Baltic states this year, we launched the planned expansion of Sonex Grupe to the promising Eastern markets – Belarus, Russia and Ukraine", Arunas Bartusevicius, the CEO of Sonex Grupe, says.
According to Bartusevicius, more than 200 thousand computers are likely to be sold in Belarus next year, and Sonex expects to take a big share of the market.
The new Sonex company is planning to manufacture computers and servers for Belarusian and Russian markets as well as provide IT solutions, products and services.
Tadas Kaselis who has been working as a sales manager up to now, will head Sonex in Belarus.
(Lietuvos Zinios, Verslo Zinios, Lietuvos Rytas)

The state payment balance is negative
The state payment balance was negative in June and made LTL 214.7 million. If compared to May, the current account deficit (CAD) rose by LTL 90.4 million, yet it declined by LTL 4 million if compared to June 2002. The growth of CAD was predetermined by increasing foreign trade deficit and lower surpluses of services and current transfers.
Vilniaus Bankas' finance analysts have estimated that CAD made LTL 448.9 million in the first quarter of this year or 3.7 percent of the country's GDP. If compared to the first quarter last year, CAD declined by LTL 63.7 million.
In June, versus May, exports of goods edged up by 6 percent, while imports rose by 11 percent. As compared with June 2002, exports increased by 11.2 percent, whereas imports climbed by 8 percent.
(Respublika, Verslo Zinios, Lietuvos Rytas)

Tuesday 12th of August, 2003

Milk export is growing this year
In January-July, 47,226 tons of milk products were exported from Lithuania, a rise of 7.7 percent if compared to the same period last year when 43,481 tons of milk products were exported, the State Food and Veterinary Service has reported.
Exports of cheese grew by 3.5 percent up to 19,250 tons, that of canned milk – 54.8 percent up to 4,794, milk whey - 36.5 percent to 4,040 tons, and ice-cream - 7.4 percent to 3,580 tons.
Seven-month imports of milk and dairy products reached 6,101 tons, a decline of 18.9 percent from January-July 2002. Imports of milk powder dropped 3.2 times from 3,340 tons to 1,050 tons during the first seven months of 2003.
(Respublika, Lietuvos Zinios, Verslo Zinios)

Linas is reviving again
Panevezys-based textile company Linas is raising its production volume, as it keeps receiving more and more orders after the summer vacation.
"We are working at full power for the second week already and number of orders is still growing; we believe we have overcome seasonality and we will not change the business plan prognoses", Romualdas Mazylis, the press representative of Linas, says.
Linas is planning to reach turnover of LTL 72.3 million this year and post a pre-tax profit of LTL 3.5 million. In 2002, Linas posted a net profit of LTL 2.9 million. The company reported a loss for the first half of this year.
(Verslo Zinios, Lietuvos Zinios)

Gazprom is going to pay more for shares
Russian gas concern Gazprom submitted to the State Property Fund (SPF) a revised bid on a price of the 34-percent stake in the Lithuanian natural gas utility Lietuvos Dujos (Lithuanian Gas) and a formula for the price of natural gas supply on Monday.
The privatization tender commission, in charge of Lietuvos Dujos sell-off, set off to analyze the revised-up bid immediately, Nerijus Eidukevicius, the Vice-Minister of Economy, said.
Gazprom will allegedly offer LTL 91 million for the stake and a LTL 9 million premium, linked with state caps on gas prices to large industrial users.
Initially, the Russian concern offered LTL 80 million for the 34-percent stake in Lietuvos Dujos.
The state owns a 58.36-percent stake in Lietuvos Dujos, with the consortium of Ruhrgas and E.ON Energie holding a 35.49-percent stake.
(Lietuvos Rytas, Lietuvos Zinios, Verslo Zinios, Kauno Diena, Respublika)

Monday 11th of August, 2003

Finns are to launch beer production in the Baltic States
The Finnish brewery Olvi is considering a possibility to move part of their activities to the Baltic States. Since alcohol excise has been reduced just a little in Finland, number of working places is likely to decline, as companies will move part of their production to the Baltic States. They say that Olvi that controls Ragutis brewery in Lithuania, Cesu Alus in Latvia and Tartu Olletehas in Estonia is also considering the possibility to move part of its production.
"Some 10 thousand people might lose their jobs in the overall chain from barley fields to restaurants and shops," Markku Ronkko, the managing director of Olvi, says.
Olvi reported consolidated sales of EUR 53.598 million for the first half of this year, a decline of 1.2 percent if compared to the respective period in 2002. Since beer prices have dropped in Lithuania, Ragutis posted lower turnover for the first half of this year, too.

Estonians bought a Lithuanian shipbuilding company
Last week, Western Invest sold 92.81 percent of shares in Vakaru Laivu Gamykla shipbuilding company for LTL 33.596 million to the Estonian shipbuilding concern Baltic Laevaremonditehas Grupp (BLRT Grupp). The Estonian company became an investor of the Klaipeda-based company in 2001 after the privatisation agreement with Western Invest was changed, as the latter had not repaid loans to Parex bank.
Vakaru Laivu Gamykla posted a net profit of LTL 10.022 million for 2002, a rise of 17.5 percent if compared to 2001 and increased its turnover by 9 percent up to LTL 138.4 million.
Lietuvos Rytas

Vilniaus Bankas is moving towards Ukraine
Vilniaus Bankas is considering a possibility to establish its representative office in Ukraine – owners of the bank have noticed the rapidly growing economy of the country as well as its promising financial market. The bank is ready to follow its clients that show increasing interest in Ukraine.
Vilniaus Bankas that is controlled by SEB group is obliged to analyse development possibilities in Ukraine, Kaliningrad region and Belarus.
"We are interested in Kaliningrad, as it is close to Lithuania and a lot of Lithuanian businesspeople work there while Ukrainian market is huge, dynamic and promising. The country's macroeconomic indices are optimistic, too", Aivaras Karalius, the advisor of VB' board chairman for the bank's expansion in Ukraine, says.
Vilniaus Bankas has not established its representative office in Ukraine as yet. "We will probably start from opening a representative office while later a bank itself might be established there, too", Karalius says.
(Verslo Zinios)

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