Ambitious Snaige questions earlier optimism in Russia

  • 2004-12-09
  • From wire reports
VILNIUS - Increasing competition is forcing Snaige, one of the Baltics' largest manufacturers, to review its ambitious plans for conquering the Russian market, the Verslo Zinios business daily reported last week.
Analysts have pointed out that Snaige will have to settle for more modest results compared with those the company declared at the opening of its Kaliningrad subsidiary last spring.

Danielius Bunkus, CEO of Snaige's plant in Kaliningrad, refused to comment on plans proposed for this year, but he did not deny that the Snaige trademark has been forgotten in Russia.

"In the beginning we were very optimistic while assessing the possibilities of Kaliningrad," he admitted.

Business in Russia has been aggravated by fierce competition. Vestel, a Turkish producer that operates a TV plant in Russia, is preparing to open up a refrigerator plant in the area that should begin operation in May 2005. "The appearance of a new competitor will affect our company," Bunkus admitted.

However, he pointed out that while compiling an action plan Snaige had anticipated the impact of new rivals appearing on the market. Bankus could not even deny the possibility that Chinese producers might launch exports to Russia.

After opening its new plant in Kaliningrad, Snaige announced its intentions to manufacture 150,000 refrigerators and conquer some 10 percent - 20 percent of the booming Russian market this year. However, since then the company has been forced to admit that it will take three years to achieve its initial goals.

The refrigerator producer reported 28.3 million litas (8.2 million euros) in unaudited pretax earnings for the first nine months of 2004, a rise of 10.1 percent year-on-year. Turnover increased by 8.7 percent to 258.8 million litas in the reporting period.

The list of Snaige's shareholders shows the investment company Hermis Capital with 40 percent holding, Estonia's Hansabank customers with 37.88 percent and Swedish SEB customers with a combined 6.2 percent stake.