Production and product prices increased
„The first half of the year has not seen any reduction in the challenges facing the furniture industry, but in addition to the continuing fluctuations in raw material prices and supply chain disruptions, we are also facing a spike in energy costs. As a result of the war, we have quickly redirected the supply of essential raw materials, replacing Ukraine, Russia, and Belarus with partners in Poland, Latvia, and other Western European countries. These challenges result in additional expenses for the business and will have an impact on this year’s financial performance,“ says Egidijus Valentinavičius, SBA vice president.
According to him, increased production and rising prices of raw materials led to a one-fifth increase in half-year sales. It could have been faster if the plant in Belarus, which has been suspended due to the war in Ukraine, had been operational.
„SBA Home’s factories in the first half of the year sold one-fifth more than in the same period last year. Klaipėdos Baldai grew its revenue by one-third to EUR 29 million in the second quarter of this year. The merger of the Klaipėda region’s Laminn furniture blanks plant with Inno Line resulted in sales of EUR 28 million, double the same period last year. Visagino Linija’s revenue from furniture sales was a quarter higher at almost EUR 24 million. Šilutės Baldai also sold a quarter more products – EUR 15 million. Mebelain in Belarus has been suspended and inactive since March. Meanwhile, SBA’s upholstered furniture producer Kauno Baldai increased its sales by a tenth in the first half of the year, to almost EUR 15 million.
No grounds for optimism
According to Mr Valentinavičius, the financial results for the second half of the year will be determined by the hottest current factors: geopolitical tensions, energy and raw material prices, and high inflation, which has a negative impact on consumption. Europe is facing its most challenging cold season yet due to record energy prices and possible resource shortages, which will affect not only the industrial sector but also ordinary consumers. Already in the first half of the year, SBA companies’ energy bills were almost double (85%) those of a year ago and three times higher than two years ago. In the commodities market, there are also no clear positive signals and no favourable long-term trends.
„We do not see any grounds for business optimism, at least in the short term. The anticipated decline in demand due to unfavourable conditions may affect production volumes. We are managing the challenges by finding alternative solutions, introducing efficiency improvements and energy-saving measures. However, more substantial and focused state support would help the country’s economy and business to weather this period and preserve competitiveness and jobs,“ said the SBA vice president.
The SBA Group operates in the furniture, textiles, and real estate sectors. The group’s companies in Lithuania employ around 4,800 people. It exports its products to 50 countries around the world, with sales of EUR 404.6 million in 2021.
