Latvian business news

The milk processing and ice cream production company “Food Union”, which includes the production centers AS “Rigas piena kombināts” and AS “Valmieras piens”, closed the year 2023 with a consolidated turnover of 150.2 million euros , which is +12% more compared to the previous period (127.8 million euros).

Gross profit increased +49% from 17.7 million euros in 2022 to 26.3 million in 2023. The company’s net profit in 2023 was negative in the amount of 1 million euros.

The increase in turnover in 2023 is related to a new sales strategy, especially in terms of export markets, while the increase in gross profit is due to a reduction in costs related to key raw materials and energy resources. Last year, the company managed to reduce losses from 4.2 million euros in 2022 to 1 million euros.

“Although the economic situation did not improve significantly last year compared to 2022, the costs of some resources remained and, therefore, our operations could change from emergency mode to a more predictable and predictable mode . In 2023, our attention was directed to a review of procurement strategies, further reductions in operating costs, investment projects that would ensure greater automation and energy independence, a more powerful to conquer export markets, of course, hard work was in our core business – portfolio revised product and development of new, innovative milk and ice cream products,” comments results 2023 Artūrs Čirjevskis, head of “Food Union ” in Europe and Latvia.

In 2023, “Food Union” also started producing four different flavors of “Lakto” sub-brand fermented milk drinks “Lakto Imuno” without lactose, the production volume of “Lakto” brand products increased by 38% in 2023 compared to 2022. .

The summer season 2023 became one of the best in the last six years, with the total ice cream market in Latvia growing by more than +10%, and sales revenue “Food Union” up more than 14% in the summer a year earlier.

One of the biggest investment projects in 2023 was related to increasing the level of automation in production. By investing more than 2 million euros, “Food Union” purchased automatic packaging systems for ice cream, cottage cheese and cream cheese, which allows to increase the production capacity of these products, simplify manual or mechanical work, replace it with a solution. that meets today’s requirements.

The second largest investment project was the conversion of thermal energy production equipment to use other types of fuel to reduce dependence on one type of energy, namely the installation of equipment to prepare for the use of natural gas and liquefied gas (LPG). in the production of “Rigas piena kombinata” and “Valmiera pies”.

Responding to the continued interest of teachers and students of general education schools in how different milk products and ice cream are made, in 2023 “Food Union” created an educational and entertaining curriculum “Milk Class”. It is designed for children of elementary and primary school age as an interesting trip that takes place in the building “Rigas piena kombinat”. The concern intends to continue developing the path of education for children and youth in the future as well.

In 2023, the management of “Food Union” continued to provide donations worth about 173 thousand euros, supporting Ukrainian refugees and Ukrainians in Latvia.

As previously reported, at the beginning of this year changes were made in the ownership structure of “Food Union”. As a result of the transaction that ended in March 2024, the other leading investment company in the world “PAG Private Equity” bought shares of the “Food Union” group of companies in Europe from the company’s founder and shareholders another private. The head of the group “Food Union” in Europe and Latvia, Artūrs Čirjevskis, continues to lead the work and prioritize streamlining the group’s production, review of the product portfolio and development of new products in the competence centers in Riga, strengthening of local brands with a wide range of marketing tools, more active expansion in export markets and existing product portfolio, as well as the creation of a new management team.

In the first nine months of 2024, the data center business turnover of the technology and innovation company “Tet” has increased by 16% compared to the same period last year.

The number of businesses that have started to use data center services more actively is also increasing, including retail, e-commerce and manufacturing. Customer interest in moving their company’s IT infrastructure to data centers and cloud computing platforms has prompted the expansion of the company’s global data center infrastructure and the start of work on several new projects.

From May 2024, “Tet” has expanded the geographical coverage of the Tet Cloud platform and enables customers to place their data in Germany as well, in addition to the existing data centers already in Riga.

“Such a strategic step was taken, taking into account the interest of customers in providing a safe and reliable data storage infrastructure outside of Latvia. The new infrastructure is receiving a good response among customers, as it provides a lack of geographical infrastructure more than 1,500 kilometers away from Riga and is located in one of the -the most powerful and secure data centers FR5, owned by the reliable and recognized international data center service provider Equinix. “, said Tet data center business development manager Māris Sperga.

Investing 30 million euros, “Tet” will start work on the construction of a new DC7 data center in Salaspils next year. The data center’s technological systems offer innovative cyber security solutions, as well as unique opportunities for customers to store data in high-performance computing equipment, providing a cooling capacity of 30 kW + per rack. The Salaspils data center is the first project in Latvia, in which the thermal energy generated from the operation of the center will be transferred to the company “Salaspils Siltums” and delivered to local residents.

The new cybersecurity directive NIS2 and the increase in cyber attacks on enterprise systems have increased the demand for secure data storage services.

“In recent months, more and more companies in Latvia, especially in the retail, e-commerce and manufacturing sectors, have started using external data centers or cloud computing platforms for data storage. Companies more often choose a single reliable service provider that provides both infrastructure options and data usage, as well as IT security services,” explained M. Sperga.

Companies are also more interested in the possibilities of using artificial intelligence (AI) to improve the efficiency of their work and create new solutions for business development. “Tet” has also started research in this regard to offer customers an infrastructure that will ensure that AI solutions are integrated into the company’s processes already in 2025.

This year, the situation in the wood industry is similar to the situation last year, Jānis Mierkalns, a member of the board of the wood production and trading company SIA “Pata”, told LETA.

He said there is still low demand in the export markets for soft wood products, which are used by consumers for building construction, renovation, repair work, as well as making furniture and decorations.

Similarly, the policy sector of the European Central Bank, the US Federal Reserve System and the Central Bank of Japan to slow the economy and reduce inflation is still felt. Although interest rates have been gradually reduced, which is slowly increasing the resources available to consumers and money in the market for development projects, no major changes are currently being felt.

He expected to see a real increase in demand only at the end of this year or in the first half of next year.

Mierkalns admitted that this was a difficult time for many companies in the forest industry, but it should be remembered that this is the detail of this industry. The forest industry is one of the pillars of Latvia’s national economy, accounting for about 20% of Latvia’s product exports. This means that the industry is very dependent on the global economy and its circulation.

Therefore, it should be noted that the number of logging operations has decreased significantly in recent years, which means that as the economy grows, a situation may arise where the demand is higher than the supply, leading to a significant increase in the final prices of goods.

He also noted that in the last two years, it was possible to organize nationally the issues that contribute to the competitiveness of manufacturing companies and the export of the industry in foreign markets. Organized issues related to getting cheaper electricity by disconnecting from AS “Sadales tīkls” and connecting to AS “Augstspriegumu tīkls” electricity transmission, access to qualified personnel, to special specialization in electronics and mechanics, as well as access to capital.

It is already reported that in 2023 “Pata” works with a turnover of 234,801 million euros, which is 29.7% less than the previous year, but the profit has decreased several times – to 1.639 million euros .

The company was registered in 1999, and its share capital is 16.135 million euros. Uldis Mierkalns is the sole owner of “Pata”.

The Swedish bank “TF Bank”, which specializes in consumer loans, has opened a branch in Lithuania.

The branch started working this week.

“TF Bank” has become the 19th bank or branch of a foreign bank operating in Lithuania, but previously it provided services in the country without a branch, the Bank of Lithuania announced.

According to data from the Lithuanian social insurance fund “SoDra”, 23 employees work at the branch of “TF Bank” in Lithuania.

The bank’s website says that “TF Bank” is an online lending bank that offers banking and e-commerce solutions to consumers. In Lithuania, the bank provides consumer services and refinancing.

In addition to Sweden and Lithuania, “TF Bank” also works in Austria, Denmark, Estonia, Ireland. In Latvia, the Netherlands, Norway, Poland. In Finland, Poland, Spain and Germany through subsidiaries, branches or cross-border banking services under a Swedish bank licence.

“TF Bank” branch has been operating in Latvia since 2021.

“TF Bank” was founded in 1987 in Sweden and offers banking services based on Internet solutions. It is a public joint-stock company and has shares listed on the Stockholm Stock Exchange “Nasdaq”.

The non-bank lender “Eleving Group” will start the initial public offering (IPO) of shares in the Baltics and Germany on September 23.

During the IPO, “Elevating Group” will offer the opportunity to subscribe for up to 24.5 million ordinary shares, or 20.7% of “Elevating Group” shares, and the price is set in the range of 1.6 to 1.85 euros per unit . The final price of one share will be specified after the end of the public offer.

The aim of the company, by issuing the new shares for further business development, is to raise capital up to 30 million euros, keeping the opportunity to increase the offer by 10 million euros, in which existing shares. The proposed width of the price of one share anticipates the capitalization (value) of “Elevating Group” before issuing new shares in the width of 160 to 185 million euros.

Private investors from Latvia, Estonia, Lithuania and Germany will be able to subscribe to “Elevating Group” shares through a public offer, by placing a share subscription order in their bank’s investment department or by using the services of a bank broker. The offer will also be available privately to accredited institutional investors from Europe.

According to the IPO prospectus, the net proceeds from the share issue will be used to expand the business by introducing new concept products, opening new markets, as well as strengthening positions in existing markets.

In the medium term, “Elevating Group” expects to almost double the size of the business. In the short term, part of the net proceeds of the issue are expected to be directed to the repayment of existing debts to reduce the financing costs of “Elevating Group”, as well as corporate purposes another.

As a result of the IPO, the shares are expected to be listed on the official list of “Nasdaq Riga”. The IPO will last until October 8.

“Eleving Group” has named “LHV Pank” as the main organizer of the IPO, while “Signet Bank”, “Auerbach Grayson & Co” and “MM Warburg & Co” have been named as co-organizers of the issue. Several sales representatives from Europe and the USA will also work on the IPO implementation, and “Aalto Capital” will provide financial consultation for “Elevating Group” and its shareholders.

The CEO of “Elevating Group” Modests Sudņuis states that the company has issued bonds of around 400 million euros in more than ten years.

Sudnuis expresses confidence that with this IPO the development and dynamics of the Baltic capital market will be encouraged, as well as laying a stronger foundation for the future business growth of “Elevating Group”.

After the IPO, the company plans to pay dividends to shareholders on a semi-annual basis. In order to be paid out to shareholders with a target payout ratio of 50% of profit, the equity share (after dividends) must exceed 20%.

It was already reported that the turnover of the concern of the “Elevating Group” last year was 191.1 million euros, which is 8.9% more than in 2022, while the profit of the concern increased by 69.6%, reaching 23.4 million euro.

“Elevating Group”, founded in 2012 under the name “Mogo Finance”, currently operates in 16 global markets, offering financial services in the transfer and consumption sectors. The group includes the vehicle financing segment brands “Mogo”, “Primero”, “Renti” and “OX Drive”, as well as the consumer financing brands “Kredo”, “Sebo”, “Tigo” and “Express Credit”. The total number of loans granted by the group is around EUR 1.5 billion.

Currently, 55% of the group’s portfolio is located in Europe, 32% in Africa and 13% in the rest of the world. After the name change, the “Mogo” brand has been retained​​​​​​as a product brand both in Latvia and is also represented in all vehicle financing markets in the product portfolio of “Elevating Group” . The headquarters of the organization is in Latvia. “Elevating Group” carries out economic activities in the Baltics and Europe, in the Caucasus and Central Asian regions, as well as in East Africa.

The company “Mogo” was registered in 2012, and its share capital is five million euros. The real beneficiary of the company is Aigars Kesenfelds. “Mogo” offers rental, modification and car rental services in Latvia.

Investment platform “Mintos”, established in Latvia, made a profit of 650,419 euros last year, compared to a loss a year earlier, the company informs.

On the other hand, the company’s revenue increased by 30% last year, reaching 11.445 million euros compared to 8.832 million euros in 2022.

At the end of the year, the amount of funds under the management of the investment platform exceeded 600 million euros. The investor base of “Mintos” covers all of Europe, but Germany and Spain are the main markets. On the other hand, in the third quarter of 2024, “Mintos” expanded its geographical presence, officially starting operations in Portugal and the Czech Republic.

The company says that “Mintos” will continue to strengthen the existing portfolio, which includes traditional and other asset classes. To promote growth, in April 2024, “Mintos” in collaboration with “Crowdcube” realized the second crowd funding campaign, attracting 3.1 million euros.

“Mintos” executive director Mārtiņš Šulte emphasizes that 2023 was a year of change for the “Mintos” platform, as other investment products were added to the basic offer – investments in the loans.

“Mintos” operated with a loss of 195,950 euros in 2022.

Founded in Latvia in 2015, “Mintos” is an investment platform that offers the opportunity to invest in loans issued by other loan companies from around the world.

According to the information provided by the company, the largest shareholders of “Mintos” are SIA “Alppes Capital” with Aigars Kesenfeld (30.93%), SIA “MS Cap” with Šultem (15.63%), AS “Obelo Capital” (10.31%), whose largest shareholder is Māris Keišs, SIA “EMK Ventures” with Kristaps Ozola (10.31%) and JSC “Novo Holdings” (10.31%), whose individual -largest shares at Alberts Pole.