Demand and interest rates are the main challenges
Jolanta Grašienė, SBA Vice President: „Maximum focus on production efficiency, process improvement and the development of real estate projects are the key aspects that best describe the previous year. The global downturn in demand for real estate and furniture, the stagnant textile market and the high interest rate environment had an impact on overall performance. However, after assessing the risks last year, we invested in projects and technologies to generate future revenues. We have allocated over EUR 58 million for investments in 2023.“
According to Grašienė, significant investments were made in the real estate sector last year in addition to modernising manufacturing companies. Most funds were directed towards the Urban HUB business cities developed by SBA Urban in Vilnius and Kaunas. Additionally, the first phase of the residential housing project Nemunaičiai in Kaunas was finalised, and the apartment project Kopų Slėnis (The Valley of Dunes) near Palanga is nearing completion.
Anticipated growth and project development
SBA Vice President elaborates further: „The first half of this year is expected to show moderate annual growth. If the trend of base rate reductions initiated by central banks is sustained, it should provide a positive impetus to the property market and consumer sentiment. However, this year, we do not foresee a sudden rebound in the manufacturing sector. This is where we will continue to invest in innovation and focus on operational efficiency.“
According to Grašienė, SBA's investments, with partners at EBRD and local banks, the investment company TABA Invest, and bonds raised in the capital markets could be nearly double this year compared to last year. Nevertheless, a comprehensive assessment of the market situation and perspectives will determine each investment project. It is already apparent that in 2024, further development of the Nemunaičiai in the Kaunas District and the continuation of the Urban HUB projects will occur. Furthermore, construction of the unique concept of Vėjo Miestelis (Wind Town) in Svencelė by the Curonian Lagoon has started this year, and the project's first phase is expected to be completed in a year. Various scenarios for the development of furniture manufacturing companies are also being explored.
According to audited data, the SBA Group's furniture sector achieved consolidated sales of EUR 333 million last year and generated a net profit of EUR 4.5 million. Some companies are shifting from two to three shifts, while Inno Line near Klaipėda already operates in four shifts. This year, the assortment of new products introduced by SBA companies has increased by about a third.
SBA's textile sector, which includes Utenos Trikotažas and Šatrija, and Mrija operating in Ukraine, is still affected by the global demand downturn this year. The group's companies continue improving efficiency while seeking new clients and markets.