Boston, MA -- (SBWIRE) -- 05/26/2014 -- Latvia's macroeconomic environment continues to improve at the same time as smooth transitions to a new currency and new Prime Minister. Market growth forecasts are strong although the country will continue to present a modest opportunity to larger multinational companies on account of its relatively small market size. Meanwhile, tensions between Ukraine and Russia may provide challenges for local manufacturers looking towards exports to Russia to boost revenue.
Headline Expenditure Projections
- Pharmaceuticals: EUR325mn (USD429mn) in 2013 to EUR341mn (USD447mn) in 2014; +5.0% in local currency terms and +4.2% in US dollar terms.
- Healthcare: EUR1.45bn (USD1.92bn) in 2013 to EUR1.53bn (USD2.00bn) in 2014; +5.1% in local currency terms and +4.3% in US dollar terms.
Risk/Reward Ratings: Latvia is ranked 12th out of the 20 countries surveyed in the Central and Eastern Europe (CEE) region in Q314. Latvia's ranking has improved two places compared with our assessment in the previous quarter. Latvia's overall score improved by 1.2 points from 48.8 in the previous quarter to 50.0 in Q314. Lativa's score remains below the regional average of 51.6, indicating the country's challenging business environment, particularly in terms of potential industry rewards. Consequently, direct multinational operations are limited and domestic companies such as Grindeks have looked abroad for growth opportunities.
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Key Trends And Developments
- Grindeks reported a 1% year-on-year increase in net profit to EUR13.8mn (USD19mn) in 2013. The company's turnover amounted to EUR118.5mn (USD163.1mn). In 2013, the company's gross profit margin was 60%, while its net profit margin was 11.6%. The company's products manufactured in 2013 were exported to 59 countries globally for a total of EUR112.4mn (USD154.8mn), up by 1.1% y-o-y.
- OlainFarm's sales to Ukraine and Russia will not be significantly affected by the ongoing standoff between the two countries according to Olainfarm's Chairman Valerijs Maligins in March 2014. The company's sales to Ukraine rose 4% year-on-year in January 2014, with Russia, Latvia, Ukraine, Belarus, the UK and the Netherlands the company's main markets for sales during the same month. However, if the EU and its allies fail to resolve the dispute in Ukraine, the Olainfarm's sales could be negatively impacted in both Ukraine and Russia.
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