Observer "Lietuva"
WEEK 51st

Saturday 20th of December, 2003

Successful year for Lithuanian furniture makers
Lithuania's largest furniture making companies had an extremely successful year in 2003. Most of them have reported record-breaking turnover, the profit exceeded all expectations as well. Lithuanian furniture industry became one of the leading fields in the country, while furniture makers became the best exporters. The main customer of the Lithuanian companies that is accountable for the boom is the Swedish concern IKEA.
The leader among the Lithuanian furniture makers is Klaipedos Baldai. The company's turnover has climbed over LTL 100 million this year, which is a significant increase from LTL 75 million turnover reported last year. Klaipeda-based company sold 87 percent of its production abroad.
Kaunas-based furniture making company Kauno Baldai achieved record-breaking results as well. Representatives of the company say the production volumes this year have been the largest since 1974. The sales of the company amounted to LTL 42.5 million.
Another leader of the industry is Vilniaus Baldu Kombinatas. The company initially predicted that its profit would reach LTL 6.5 million. However, the company now aims at LTL 10 million profit. Vilniaus Baldu Kombinatas exports 95 percent of all made furniture.
(Lietuvos Rytas)

VST sale agreement signed on Friday
Owners of the Lithuanian retail group VP Market are to pay 539.845 million litas (EUR 156.477 mln) for a majority interest in Vakaru Skirstomieji Tinklai (VST), the western part of the national power grid, and to invest at least 420 million litas in the company over a period of five years.
These commitments are set out in the agreement on the sale and purchase of 77 percent of shares in VST that was signed on Friday by the Lithuanian State Property Fund (SPF), NDX Energija and a consortium of nine private individuals, who are owners of VP Market.
The acquisition will be financed by VP Market's owners themselves and a consortium of five local banks led by Hansabankas.
VST supplies electricity to over 656,000 consumers in the regions of Kaunas, Klaipeda and Siauliai.
(Lietuvos Zinios, Respublika, Lietuvos Rytas)

Kesko and Rimi join forces in the Baltic countries
Finnish Kesko Food Ltd. And Swedish company ICA, controlling the third largest Lithuanian retail chain Rimi, on Friday signed an intention agreement on the establishment of a new joint company in the Baltic countries. The company would unite retail operators in Lithuania, Latvia and Estonia. Kesko Food and ICA will have 50 percent of the shares of the joint company each.
The founders of the new enterprise will aim to become the leaders of the Baltic retail market and cover 25 percent of the market in three years.
ICA controls 32 supermarkets in Lithuania as well as a logistics centre in Vilnius.
Ignas Staskevicius, CEO of VP Market, says the market situation in Lithuania will not change, as Kesko Food does not control anything in Lithuania. Both Kesko Food and Rimi operated unsuccessfully in Latvia, thus the merge may help the two companies increasing their market share, thinks Staskevicius.
Staskevicius adds that the Dutch company Ahold, which owns 50 percent stake in ICA, was a more serious competitor for VP Market than Kesko Food.
(Respublika, Lietuvos Rytas)

Friday 19th of December, 2003

Profit of Grigiskes is nearly LTL 10 million
Grigiskes, Lithuania's leading hardboard and toilet paper producer, announced that its pre-audit net earnings came in at LTL 9.9 million for the 11 months of this year. It is a significant rise from net earnings of LTL 2.749 million in the January-through-November period of 2002.
Gintautas Pangonis, CEO of Grigiskes, says the company planed to earn more this year but the profit exceeded the initial plans due to the sale of real estate unsuitable for production.
The company sold goods worth LTL 7.8 million in November, which is an increase of 13.8 percent year-on-year.
(Verslo Zinios)

Industrial sales on the rise in Lithuania
Lithuanian industrial sales rose by 13.5 percent in the first 11 months of 2003, compared with the same period in 2002. Excluding petroleum products, the growth rate was 15.5 percent, the country's Statistics Department has reported.
In November, overall industrial sales increased by 17.4 percent in year-on-year terms, but declined by 6.4 percent on a month-on-month basis.
The following industries recorded a drop in sales over the month: leather and leather products (25.6 percent), machinery and equipment (17.6 percent), wood and wood products except furniture (17 percent), foodstuffs and beverages (4 percent), chemical products (1.7 percent), paper and paper products (1.4 percent), and refined oil products (0.6 percent).
(Verslo Zinios)

Wages rise slightly in Lithuania
Lithuania's real wages grew by 3.8 percent in 2002, compared with 2001, according to the preliminary results of a 2002 earnings survey released by the country's Statistics Department.
Real wages in the public sector rose by 3.8 percent last year, while real wages in the private sector were up 4.9 percent.
The average net monthly wage in Lithuania stood at LTL 728.4 in 2002, a 4.1 percent increase over 2001. The average net wage in the public sector rose by 4.1 percent to LTL 805.2, while it went up by 5.2 percent to LTL 672 in the private sector.
Hotel and restaurant employees earned the least last year, at LTL 523.8. Low wages were also recorded in agriculture and forestry, at LTL 620.1, and in the fishing industry, at LTL 670.9.
EUR 1 = LTL 3.45
(Kauno Diena)

Thursday 18th of December, 2003

March to the neighbours / Expansion of VP Market leads to Estonia and Poland
UAB VP Market has approved the plan of investments in Estonia and Poland for 2004 and 2005. The chain will offer the first shelves of its Estonian stores for the Lithuanian producers. Meanwhile, the Polish branch of the chain will start purchasing Lithuanian products only after May 1, when Lithuania officially joins the European Union.
VP Market currently has only one T-Market store in Estonian Pernu town. However, the company plans to invest LTL 16 million over the next two years and open 37 new stores. Gintaras Marcinkevicius, head of SIA VP Market, says the company has already rented several store and should open them in March.
The first Polish store of VP Market chain should open its doors early next year. The store will be opened in Warsaw or in its suburbs. The chain plans to have stores in the Polish towns with the population of at least 20,000. Thus, 1,000 stores should be opened in Poland by 2007.
(Verslo Zinios)

Forage producer enters promising egg business
AB Kretingos Grudai, one of the largest Lithuanian forage producers, has entered egg business and considers it to be a very promising one. Its two subsidiaries – UAB Translinija and UAB Vyturys – are related to the egg business. AB Kretingos Grudai plans to invest LTL 4 million this year into the renovation and modernization of the old farm buildings in Plunge and Telsiai. The company expects the investments to return in 5-6 years. It has already invested USD 2 million in Kaliningrad, where the company owns Kaliningrado Paukstynas (Kaliningrad Poultry Farm). The hens at the Russian poultry farm lay 250,000 eggs per day that are sold in Kaliningrad.
Valdemaras Sadaunykas, head of UAB Vyturys, says the business is promising because the eggs are more expensive in the neighbouring Estonia, Latvia and Poland.
Subsidiaries of AB Kretingos Grudai have been selling eggs only for minor retailers so far. However, the negotiations with the large retail chains should start next year. Valdemaras Sadaunykas admits the company aims at the third place in the Lithuanian egg market.
(Verslo Zinios)

Kalnapilis Pilsner – Product of the Year 2003
Kalnapilis Pilsner beer is the first Lithuanian Pilsner family beer to receive the prestigious Product of the Year award. Kalnapilis brewery will receive the award on December 19 in Vilnius.
Kalnapilis Pilsner is brewed at Kalnapilis brewery in Panevezys. The exceptional feature of the beer is a mild bitter taste. The beer has appeared in the Lithuanian market in March of 2003 and immediately became of the favourites.
Rimantas Barakunas, author of the beer's recipe, says the Lithuanian Pilsner differs from the traditional Czech or German Pilsners in its milder taste and pleasant flavour. Rimantas Barakunas has received the award of the Danish beer academy for the recipe of Kalnapilis Pilsner.
Panevezys brewers sent the first box of Kalnapilis Pilsner as a gift for the president of the Czech Republic Vaclav Klaus.
(Lietuvos Zinios)

Wednesday 17th of December, 2003

Vilnius furniture makers work more profitably
Vilniaus Baldu Kombinatas (VBK), one of Lithuania's leading furniture manufacturers, announced a pre-tax profit of LTL 8.504 million for the first 11 months of 2003, a 14.7 percent rise in year-on-year terms.
Senior accountant of the company Gediminas Banaitis says the profit growth was due to the increased sales, introduction of new products, as well as the improvement of work effectiveness.
VBK has said its sales for the 11 months reached LTL 81 million, a 5.3 percent increase over the same period last year.
The Vilnius-based company has said it targets a net profit of LTL 6.5 million for the full year 2003.
VBK sells 94 percent of its production to the Swedish concern IKEA.
(Verslo Zinios)

MG Baltic Group buys LNK TV channel
Lithuania's MG Baltic Group is buying a 100 percent interest in the commercial TV channel LNK from Sweden's Bonnier Group for an undisclosed amount of money.
Raimondas Kurlianskis, vice-president of MG Baltic, said in a news conference on Tuesday that MG Baltic Investment, a subsidiary of MG Baltic, and Bonnier Entertainment, the current owner of LNK, signed an agreement on the purchase and sale of the shares on December 12. He said the parties expected to finalize the deal by the end of 2003.
Bonnier Entertainment owns LNK through Marieberg Media. The Swedish group bought LNK in the autumn of 1998.
Speaking in the news conference, Kurlianskis did not rule out the possibility of MG Baltic expanding into the TV broadcasting business in the other two Baltic countries as well.
LNK is one Lithuania's three private TV stations broadcasting nationwide. The TV station employs around 250 people, including the staff of producing firms.
MG Baltic controls 29 companies in various industries in the three Baltic countries, including the vodka producer Stumbras, the alcoholic beverage distributor Mineraliniai Vandenys, the clothes retailer Apranga, the mineral water producer Birstono Mineraliniai Vandenys, the news agency ELTA and other.
Verslo Zinios, Respublika, Lietuvos Zinios, Kauno Diena, Lietuvos Rytas

Retail sales up 12.8 percent in Lithuania
The aggregate turnover of Lithuanian retailers, including car service centres, filling stations and restaurants, reached LTL 14.335 billion in the first ten months of 2003, a 12.8 percent rise year-on-year, the country's Statistics Department has reported.
The combined domestic sales increased by 18.1 percent over the year from October 2002 to October 2003, but were down 9.5 percent in October versus September of this year.
Excluding the auto-related sector, the overall domestic sales increased by 9.8 percent during the ten months of 2003, compared with the respective period in 2002. In October, the sales went up by 13.2 percent in year-on-year terms and recorded a 5.3 percent growth rate month-on-month.
(Respublika)

Tuesday 16th of December, 2003

Privatisation of Eastern Lithuania's power distribution network might be suspended
The Lithuanian parliament's Economics Committee decided on Monday to recommend that the government "refrain" from the privatization of Rytu Skirstomieji Tinklai (RST), the eastern part of the national power grid.
Vaclovas Karbauskis, chairman of the parliamentary committee, said the authorities should wait for a year or two to see if Vakaru Skirstomieji Tinklai (VST), the western part of the national power distribution network, operates efficiently after its privatization before raising the issue of RST privatization again.
Estonia's state-run energy company Eesti Energia is the only remaining bidder for a 71.35 percent equity stake in RST. The Lithuanian authorities, however, do not think that the Estonian company would be a suitable owner of the power distributor.
RST posted a pre-tax profit of LTL 15.5 million on revenues of LTL 505.1 million for the first nine months of 2003.
(Lietuvos Rytas, Lietuvos Zinios)

Cheap beverages lay the road to the neighbours
Siauliai-based beverage producer UAB Gaivineta started exporting refreshments to Estonia two months ago and plans to enter Polish, Russian and German markets next year. The company currently exports 7 percent of its production but plans to increase export volumes to 20 percent next year.
Executives of the company say the demand for the inexpensive beverages is very high, while the production of the more expensive beverages is not profitable.
Andrius Pupsys, chief executive of Gaivineta, says the prices of inexpensive refreshments in Estonia are three times higher than in Lithuania. Gaivineta sells its beverages in Estonia under Sypsena brand name.
UAB Gaivineta plans to enter drinking water business in the coming years as well.
(Verslo Zinios)

Zemaitijos Pienas ponders merger
Lithuanian dairy group Zemaitijos Pienas does not discard a possibility of the merger with the Norwegian dairy group Synnove Finden. Algridas Pazemeckas, head of Zemaitijos Pienas, says there are signs that such a move is possible.
Synnove Finden, which has recently bought a 42 percent shares in the largest Estonian cheese producer Voru Juust, signed partnership agreement with Zemaitijos Pienas last week. Under the agreement, the two companies will open a joint company in Silute, where Zemaitijos Pienas owns cheese producer Silutes Rambynas.
Zemaitijos Pienas and Synnove Finden have agreed to cooperate in sales field and creation of trademarks.
(Verslo Zinios)

Monday 15th of December, 2003

Turnover of Doleta grew 7 percent this year
UAB Doleta, manufacturer of wooden windows, reported an 11-month turnover of LTL 11.4 million, which is an increase of 7 percent compared to the same period last year. The company has exported production worth LTL 4.5 million, which is a significant increase of 32.3 percent in year-on-year terms. The company exports 40 percent of its production to Russia, England, Norway and Germany.
Vytautas Silevicius, chief executive of Doleta, says the company plans to further increase its export volumes. The company plans to export 30 percent of its production to Western Europe, another 30 percent to the East, while the remaining part of the production will be sold in Lithuania.
(Verslo Zinios)

Swedish factory moved to Lithuania
AB Neaustiniu Medziagu Fabrikas (NMF) will soon complete the move of the illuminator factory from Sweden to Siauliai. The company managed to start business with a rather small investment but expects to soon become the largest company in the eight-company group.
UAB Artilux Baltija, part of AB Neausitniu Medziagu Fabrikas group, will complete the move of Artilux factory in January. The Swedish colleagues will be responsible for design, marketing and sales of the illuminators, while the complete production process will be moved to Lithuania.
Stanislovas Grusas, CEO of NMF, predicts that the turnover of Artilux Baltija will reach LTL 3 million next year, while the profit is expected to be LTL 50,000. Grusas says the turnover of the company may reach LTL 50 million over the next three years.
(Verslo Zinios)

Privatisation of Anyksciai Vynas to start in January
The second attempt to privatize Anyksciai Vynas, Lithuania's leading wine producer, will be launched in January 2004.
According to the privatization program, the dossiers of a public tender on privatization of a 72.93 percent stake in Anyksciu Vynas will be available from January 20 to March 15. Applications of potential bidders shall be submitted on March 17-18.
The starting price for the state's 72.93 percent shareholding in Anyksciu Vynas has been fixed at LTL 8 million.
Anyksciu Vynas posted a 6.4 pct growth in sales for the first eleven months of 2003, to LTL 39.5 million.
(Verslo Zinios)

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