Observer "Lietuva"
WEEK 36th

Saturday 6th of September, 2003

New investments – into Mazeikiu Nafta
The Lithuanian oil company Mazeikiu Nafta (Mazeikiai Oil) intends to invest some half a million US dollars into further modernization projects. Mazeikiu Nafta's shareholders will be asked to take a decision on further modernization in November.
Paul Nelson English, CEO of Mazeikiu Nafta, said dates for the second and third phases of the company's modernization should be set then as well.
The modernization, which is planned to be completed by 2009, should enable Mazeikiu Nafta to reduce the level of sulphur in gasoline from 2.2-2.3 percent to around 1 percent, and to increase the output of light oil products per ton from 72 percent to 85 percent.
The oil refinery increased its monthly output by 36.5 percent year-on-year to 726,000 tons in July, a record level in recent years. The plant refined 3.580 million tons of crude oil in the first seven months of this year, down by 2.9 percent on the same time last year.
(Lietuvos Zinios)

Official reserves grew by 2.5 percent in August
The Bank of Lithuania has announced that Lithuania's official international reserves grew by LTL 209.5 million, or 2.5 percent, in August and made LTL 8.5 billion at the end of the month.
According to the statement, the main reason for the increase was central government institutions' operations in foreign exchange, which raised the reserves by LTL 98.5 million, as well as a LTL 88.8 million increase in repo transactions with non-residents.
The reserves were also pushed up by the appreciation of the US dollar against the litas, a LTL 19.8 million increase in the value of gold holdings due to revaluation, and the central bank's net income from foreign exchange investment.
Commercial banks' required foreign currency reserves rose by LTL 22.4 million. However, international reserves were reduced by the net sale of LTL 23.1 million of foreign exchange to commercial banks.
(Respublika)

Lindra insurance company – calm and safe life
This year, Lindra insurance company is celebrating the tenth anniversary of its activities. Recently, the company has increased its authorised capital by LTL 10 million. In the first half of this year, the company signed 168.7 thousand direct insurance agreements for LTL 30.5 million.
In the first half of 2003, non-life insurance market shrank by 1.8 percent. Meanwhile, Lindra grew by 39.3 percent in terms of insurance premiums. Casco insurance showed the biggest growth – 133 percent.
As of the end of the first half of this year, Lindra controlled 9.1 percent of the non-life insurance market, an increase of 2.7 percent point from last year. The company paid LTL 7.9 million in claims, a rise of 148 percent from the first half of 2002.
(Kauno Diena)

Friday 5th of September, 2003

Bankruptcies in Western Europe to raise prices of credit insurance
For three years, number of bankruptcies has been growing while that of reinsurance companies has been declining in Western Europe. It is forecasted that because of that, credit insurance will get by 20 percent more expensive in Lithuania next year, too. However, insurers do not think that higher prices would make Lithuanian businesspeople to refuse credit insurance.
Presently, credit insurance makes some 0.2-1.2 percent of the insured turnover depending on the risk of a sector, volume of turnover and other factors. On the average, a company with an annual turnover of LTL 10 million pays some LTL 40,000-50,000 for the risk against insolvent customers.
Over the first half of this year, Lietuvos Eksporto ir Importo Draudimas (Export and Import Insurance) signed 53 percent more premiums if compared to the respective period last year. The company insured more than 200 companies, turnover of which exceeded LTL 2 billion.
Lietuvos Draudimo Kreditu Draudimas boosted premiums by 19 percent; they insured 300 companies, turnover of which made LTL 3.3 billion.
(Verslo Zinios)

Serksnenu Agrofirma is expanding machinery sales
Mazeikiai-based company of Great Britain's capital, Serksnenu Agrofirma, has been manufacturing and exporting different metal containers so far. This year, the company also found a niche for used German agricultural machinery.
Arunas Sakauskas, the head of Serksnenu Agrofirma, says that the company sold roller straw presses for LTL 0.4 million in the first half of this year, twice as much as in January-June last year.
Serksnenai businesspeople successfully sell used agricultural machinery, as Lithuanian farmers cannot afford to buy a new one. Meanwhile, used machinery is by some 5 times cheaper. For example, a used roller press costs LTL 10,000-15,000 while a new one is LTL 75,000.
Besides, the company received income of LTL 50,000 from the machinery service in the first half of this year.
Last year, Serksnenu Agrofirma posted turnover of LTL 3 million. This year, the figure is expected to make LTL 5 million.
(Verslo Zinios)

Kraft Foods do not have space in VP Market
The biggest retail trade operator in the Baltic countries VP Market and a Kaunas-based company Kraft Foods Lietuva (KFL) cannot find an agreement: last month, VP Market rejected to accept the coffee that Kraft Foods Lietuva imports from Germany and, moreover, it is renouncing the chocolates of KFL.
Marius Girzadas, PR project coordinator of KFL, refused to comment on the situation. Kraft Foods Lietuva produces chocolates Princas, Karuna as well as Daim, Milk and Tablerone sweets.
Ignas Staskevicius, manager general of VP Market, says the company is negotiating with KFL at the moment.
He believes that the two companies will find an agreement. According to Staskevicius, VP Market seeks to offer a broad assortment of products at the most favourable prices.
In late August, VP Market replaced Jacobs coffee imported by KFL from Germany by Jacobs coffee that Baltijos Didmena (Baltic Wholesale) purchases from a Polish company Kraft Foods Polska.
(Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios)

Thursday 4th of September, 2003

Unemployment rate rose up to 9.7 percent
Due to the decreased demand for labour force for temporary jobs, Lithuania's unemployment rate edged up by 0.2 percentage points in August, compared to July, to reach 9.7 percent on September 1, the country's Labour Exchange has reported.
On September 1, 2002, the unemployment rate made 10.7 percent. Admittedly, the Labour Exchange has been using a new methodology, in which the labour force indicator is lower than in 2002, since the start of this year.
As of September 1, the number of officially registered unemployed people was 157,900, a decline of 15.4 percent if compared to the same period last year.
(Verslo Zinios)

Eesti Energija is interested in privatisation of RST
Yesterday, the Estonian Eesti Energia (Estonian Energy) announced plans to participate in the privatization of Rytu Skirstomieji Tinklai (RST), one of Lithuania's two electricity distribution companies. The German energy group E.ON Energie, Finland's Fortum, the French power giant Electricite de France have also expressed their interest in the privatization of the RST grid.
"We are offering a Baltic alternative to Lithuania - we are confident that a strong Baltic-owned electrical power company would best meet the expectations of local people", Gunnar Okk, CEO of the Estonian state-owned energy utility, says.
Sandor Liive, Eesti Energia's CFO, said the Estonian company had sufficient financial resources for investments in Lithuania, noting that its performance results complied with all the requirements set out in the RST privatization program.
Eesti Energia reported revenues of LTL 1.275 billion last year while its equity amounted to LTL 2.625 billion. The company posted a net profit of LTL 130 million for 2002 while its investments made LTL 822 million.
(Respublika, Verslo Zinios, Lietuvos Zinios, Lietuvos Rytas)

Warm August put a spoke into brewers' wheels
In August, Lithuanian brewers were shocked: beer sales dropped by 20 percent if compared to July. If compared to August 2002, the decline was also big: 24.45 million litres versus 30.83 million litres. In August this year, Svyturys-Utenos Alus remained the leader of the market with the sales volume of 12.09 million litres.
"Results are extremely bad, yet they were predetermined by bad weather", Audrius Vidzys, the president of the Lithuanian Brewers' Association claimed.
Over the eight months of this year, beer export made 3.63 million litres while last year, the figure stood at 7.41 million litres. This year, Svyturys-Utenos Alus exported the largest amount of beer – 1.42 million litres.
(Lietuvos Rytas)

Wednesday 3rd of September, 2003

Satrija boosts its sales
Raseiniai-based sewing company Satrija that is controlled by Utenos Trikotazas increased its sales by 69 percent over the eight months of this year up to LTL 25.2 million.
In August, the company sold production for LTL 3 million, a rise of 27.3 percent if compared to August 2002. Satrija sells most of its production in Great Britain; this year, the company exported production for LTL 22.6 million to the country.
Egl? Gruodien?, the CEO of Satrija, is delighted that this year, the company sells not sewing services but more of its production.
Last year, LTL 1.5 million were invested into the company; this year, investments have already reached LTL 1 million.
(Verslo Zinios)

Sugar tax to be introduced
Lithuanian sugar producers will have to pay a sugar production tax of EUR 12.6/t after Lithuania's accession to the European Union.
On Tuesday, the Seimas approved amendments of the Quota Sugar Production Tax and Additional Sugar Production Tax laws. Presently, the interventional price on white sugar makes EUR 63.19 for 100 kilograms in the EU countries. Under this price, quota sugar production tax makes EUR 12.6/t.
Considering the white sugar quota offered for Lithuania (103 thousand tons) and the quota sugar production tax, the country is likely to pay some LTL 4.5 million to the EU budget.
Presently, sugar producers and importers pay a sugar fee of LTL 1/kg, which forms subsidies for sugar beet growers.
(Kauno Diena)

Flow of news. Banks
Assets of ten Lithuanian commercial banks, excluding departments of foreign banks, grew by 8.2 percent (LTL 1.305 billion) up to LTL 17.245 billion over the seven months of this year. The overall loan portfolio grew by 20.7 percent (LTL 1.481 billion) and made LTL 8.625 billion as of the end of July. Meanwhile, portfolio of provisions shrank by 8.8 percent (LTL 14.8 million).
(Lietuvos Rytas)

Tuesday 2nd of September, 2003

The Ministry of Finance forecasts a 6.8-percent GDP growth for this year
The Lithuanian Ministry of Finance forecasts that the country's economy will grow at an annual rate of no less than 6 percent in the years 2003 to 2006.
The ministry has revised its macroeconomic growth forecasts for 2003 to 2006 in view of the economy's strong performance in the first half of 2003 and growth trends.
Lithuania's real GDP growth forecast for the full year 2003 has been raised to 6.8 percent (at constant 2000 prices), from an earlier estimate of 6.1 percent. The nominal GDP growth rate is expected to reach 6 percent.
The Finance Ministry said in a statement the upward revision reflected the improved business environment and competitiveness in the domestic and foreign markets, as well as the positive impetus for economic development provided by the EU support.
The ministry now forecasts an average annual deflation rate of 0.9 percent for 2003.
(Kauno Diena, Verslo Zinios, Respublika)

Profit of Rokiskio Suris dairy increased after the audit
Rokiskio Suris dairy group earned LTL 5.382 million in audited net profit in the first half of 2003. Last year, the company reported losses of LTL 6.803 million for the same period last year. Earlier the company reported unaudited net earnings of LTL 4.916 million for the January-June 2003.
"The profit figure has been revised up after the audit, however, the sales figure remained intact", Antanas Trumpa, company CEO of Rokiskio Suris, said. The audit was carried out by PricewaterhouseCoopers.
In January-June period this year, consolidated unaudited sales of the dairy reached LTL 168 million, standing almost unchanged from the same period of last year when it made LTL 168.166 million.
(Verslo Zinios)

Banks are aiming at the competitor's business
At least three banks have confirmed their intentions to acquire Kredyt Bank's department in Vilnius. According to unofficially data, Hansabankas is the most serious candidate.
Kredyt Bank that belongs to the Belgian financial group KBC Bank&Insurance reported in July that it would sell its departments in Lithuania and Ukraine. Yesterday, representatives of Hansabankas, Nord/LB Lietuva and Parex confirmed that they are interested in the purchase.
Representatives of Hansabankas that is controlled by the Swedish Swedbank confirmed that they presented a financial offer to buy the representative office of Kredyt Bank in Vilnius, yet they did not reveal the price. According to Lietuvos Zinios daily, Hansabankas is the most serious candidate to acquire the Polish business in Lithuania.
BNS news agency reported that Nord/LB Lietuva and Parex banks have also expressed their interest the bank's department. However, Juozas Aliukonis, the vice-chairman of Nord/LB Lietuva board, says that they have already got to know that the bank's application was rejected. The banker confirmed that Nord/LB intended to buy only deposits and loans.
(Lietuvos Zinios, Verslo Zinios)

Monday 1st of September, 2003

LBS posts a profit of LTL 1.23 million
Lithuania's ferry operator Lisco Baltic Service, operated by the Danish company DFDS Tor Line, reported a profit of LTL 1.23 million for January-June this year. Last year the company suffered losses of LTL 2.29 million in the first six months of the year. Sales of the ferry operator rose by 3.5 percent, year-on-year, to LTL 73.2 million.
After the results were announced on Friday, all LBS shares were sold in the National Stock Exchange.
The major part of earnings, or LTL 1.033 million, came in from financial and investment transactions, including operations of affiliates, Jonas Nazarovas, Lisco Baltic Service CFO, said.
Meanwhile, in the January-June 2002 financial and investment transactions brought in losses of LTL 2.44 million.
The company expects to earn profit from zero to LTL 6 million.
In 2002 losses of the ferry operator reached LTL 474,600 under Lithuania's accounting standards.
(Verslo Zinios)

The minimum salary is set at LTL 450
Following the governmental decision, the minimum monthly salary (MMS) will rise from LTL 430 up to LTL 450 beginning September 1. Income of a person with a minimum salary thus will increase by LTL 13. Minimum salary will not grow for people working in the agricultural sector as well as state institutions. For them, the minimum salary per hour will make LTL 2.55, a rise of LTL 0.02, as more holidays have been approved and the number of working hours declined.
The minimum salary has not been raised since June 1, 1998.
The Ministry of Finance has estimated that after the increase of the minimum salary, the state budget will receive additional income of some LTL 22 million.
(Respublika)

Hansabankas' pension reform has started – first agreement was signed
After having received the licence for pension accumulation activities, Hansabankas signed the first agreement last week. The pension agreement was signed with Darius Nedzinskas, the vice-chairman of the bank's board. He says he has chosen Pensija 2 pension fund of the average risk where shares of companies can make up to 20 percent.
"The riskiest fund Pensija 3 where investments into shares of companies can make up to 40 percent is for people up to 30 years. Older people should not undertake such a high risk", Nedzinskas says.
The bank is planning to start actively signing agreements at the beginning of September after the final terms of collaboration with the social insurance fund Sodra are determined.
"We had 100 percent of the market for one day at least", employees of Hansabankas jested.
Hansabank controls 58 percent of the market in Latvia and 53 percent in Estonia.
(Verslo Zinios)

Number of subscribers is growing
Tele2, the operator that entered the Lithuanian mobile communications market three years ago, has already caught up with Bite GSM in terms of subscribers' number.
Relying on the data of the Statistics Department, there were 1.936 million users of mobile communications services in Lithuania at the end of the first half-year, a 52.4 percent rise year-on-year and an 18.6 percent rise since the beginning of the year.
The biggest mobile communications operator of Lithuania Omnitel announced that it had 905 thousand subscribers at the end of the first half-year, a 33.2 percent rise year-on-year.
Meanwhile Bite GSM declared that it had 479 thousand mobile communications users at the end of June, a 29.5 percent increase since the relevant period last year.
Based on this data, the number of Tele2' subscribers should surpass 500,000.
By the way, methods of subscribers' number calculation used by the Statistics Department and the mobile communications operators might differ.
(Lietuvos Rytas)

Previous weeks:
Estonia
Latvia
Lithuania
Back to
Baltic Weekly MonitorA

 TERMS & CONDITIONS / KÄYTTÖOIKEUDET. © Oy Compiler Ab. All rights reserved.