Challenges in the energy and commodity markets
„Although the SBA furniture sector has achieved its historically highest sales, business pressures continued unabated last year. A heated market for raw materials and energy prices eroded the profitability of furniture manufacturers, while the exponential spread of omicron and geopolitical factors hindered the normalisation of the situation worldwide. Nevertheless, we mobilised to meet the challenges by increasing production efficiency, and as demand for existing products continued, and new product families were introduced, we increased sales. In parallel, we continued to invest in strategic projects and innovations that will ensure long-term growth and competitiveness,“ says Egidijus Valentinavičius, vice president of SBA Group.
According to him, the same challenges are still present this year, but we expect a more stable and predictable commodity market at least in the second half of the year, though we may not be able to avoid a roller coaster. Preparations are underway for this.
„Last year, the factories Klaipėdos Baldai, Šilutės Baldai, Inno Line (formerly Germanika), Visagino Linija and Mebelain (Belarus), belonging to the SBA Home group of companies, recorded double-digit growth in sales.
„Klaipėdos Baldai sold EUR 86 million worth of products, 11% more than last year. „Visagino Linija grew by 13% to EUR 83 million. Germanika, which this year became Inno Line, sold almost EUR 70 million worth of furniture, 38% more than last year. Šilutės Baldai increased its sales by nearly a fifth to EUR 45 million. Mebelain, which is operating at full capacity, sold EUR 48 million worth of furniture, almost one and a half times more than in 2020. Kauno Baldai, a soft furniture manufacturer building a new factory, increased its sales by more than a third to EUR 27.6 million.
According to Mr Valentinavičius, the relative growth of the SBA furniture sector last year compared to the year before was also due to the fact that in 2020, the furniture factories were closed for more than a month due to downtime. Sales were also impacted by commodity and energy price shocks and the increase in prices of already manufactured products.
Launch of new factories
Last year, the SBA Group continued to invest in expanding both existing and new production capacities. As a result, the furniture group's investment in 2021 is double that invested in 2020, reaching the highest ever – EUR 48 million. Most of the funds are directed towards the construction of new factories.
„A powerful boost to SBA's furniture sector will come from the start of production at the new Inno Line plant, which will be the most robotised and automated in the Baltics, starting this spring. This year, part of the production will also move from the old premises to the new Kaunas Furniture factory. In addition, we are considering other projects, which we hope to announce in the near future,“ says Egidijus Valentinavičius.
SBA is the largest furniture manufacturer in the Baltics. It employs around 4,350 people, 360 (9%) more than a year ago.
Last year, SBA Group launched an ambitious growth strategy, which will see at least EUR 300 million invested and 800 jobs created over three years. In addition to organic growth and greenfield investments, the Group is also looking for potential acquisitions in Lithuania and abroad.
SBA Group is one of the largest in Lithuania. It operates in the furniture, textiles, and real estate sectors. The Group employs around 5,500 people. It exports its products to 50 countries around the world, with sales of EUR 342.5 million in 2020.
