"The energy price shock, inflation not seen in decades, rising interest rates, and the ongoing war in Ukraine are affecting consumer sentiment globally. This is slowing down aggregate demand considerably. The gloomy mood seems unlikely to fade as winter approaches, and consumer optimism and the resulting increase in production volumes in the furniture sector are also unlikely to be sustained, at least in the short term. However, the good news is that the markets are seeing a stabilisation of demand and a downward adjustment in energy prices. However, it would be imprudent to say that these trends are long-term," says Raimonda Kižienė, CEO of SBA Home, a company uniting five SBA furniture manufacturing companies.
According to her, although the number of sales increased this year, it was essentially influenced by the increase in the price of raw materials included in the cost price and the rise in the price of electricity. With lower production volumes and significantly higher costs, companies are maximising savings, further optimising production processes and, in some cases, are forced to revise their workforce.
In the first nine months of this year, the furniture factories in Lithuania belonging to the SBA Home group of companies sold one-sixth of their products. Klaipėdos baldai sold €30 million worth of furniture in Q3, 29% more than in the same period last year. Visagino linijos revenue from sales was 5% higher at EUR 24.4 million. In the Klaipėda region, the merger of Laminn, a furniture billet factory in Klaipėda, with Inno Line resulted in sales of €35 million, 64% more than a year earler. Sales of Šilutės baldai grew by a tenth to EUR 12.8 million. Kauno Baldai sales in the third quarter were just €1.8 million after a fire halted production.
According to Ms Kižienė, geopolitical and economic factors worldwide will continue to influence the sales of SBA furniture companies in the last quarter of this year, as 95% of furniture is exported.
"A cold winter could further stiffen the economy. Heating bills will not only determine consumer sentiment and Christmas sales. The cold winter will also affect the price of raw materials, as the increased demand for biofuels will push up the price of wood for furniture companies. However, in the longer term, falling energy prices and government measures to compensate consumers for some of the costs and slowing inflation should make buyers more optimistic and boost demand. However, this is provided that no new black swans emerge that could upset the stabilising situation," says Ms Kižienė.
SBA Group operates in the furniture, textile and real estate sectors. The Group's companies in Lithuania employ about 4,500 people. It exports its products to 50 countries around the world, with sales of EUR 404.6 million in 2021.
