Despite challenges in the raw materials and labour markets, the SBA Group’s soft furniture manufacturer Kauno Baldai sold 34% more products in 2021 compared to 2020. With the company exporting most of its production, its turnover was EUR 27.6 million, compared to EUR 20.5 million in 2020, according to a press release from SBA.
“It has been a challenging year, but with the team focused, we managed to overcome challenges in terms of raw materials, logistics, pandemics and more. We have continued to improve our efficiency in the face of rising production costs, but the unprecedented price shock is impacting profitability, as the rise in product costs for clients is lagging behind somewhat. Our sales this year were driven by the work we did in the pandemic year 2020 – forging strategic partnerships with new customers, improving production, developing new models and reaping the fruits of all that work in the past year. This year, we are continuing to expand our range of products and I have no doubt that we will achieve an even greater market share in Western Europe and Scandinavia. At the same time, we expect growing profitability,” says Tomas Mauricas, head of Kauno Baldai.
T. Mauricas also adds that last year’s indicators are compared to the relatively moderate ones for 2020, which was affected by pandemic and quarantine. Nevertheless, annual sales were boosted by the success of the last quarter of last year, during which Kauno Baldai sales grew by 35% (to EUR 7.1 million) compared to the same period in 2020 (EUR 5.2 million).
The main markets of Kauno Baldai are Germany, Scandinavia and Benelux. The company has been successfully cooperating with Germany for several years now, where it has constantly been expanding its customer base, also developing and adapting its range of products to the specifics of the market. In 2021, strong steps were taken in Finland and Denmark following the launch of partnerships with important customers. According to T. Mauricas, Scandinavia is already a familiar market with a detailed product range, so the key is not to let go and to further consolidate company’s position here.
The new factory is more relevant than ever
“The challenges in the soft furniture sector will remain the same this year: both in 2021 and in the new year, the most difficult challenge will be price. In some places we can already see signs of recovery and stability, but even at the end of the year, the prices of some raw materials were rising again. But the challenges do not end there – energy has been and continues to be more expensive, wages have risen, logistics costs have increased. All this cannot and will not be cushioned at the expense of the buyer alone. That is why it is important to look for other ways to help stabilise the situation, and one of them is production efficiency,” says T. Mauricas.
Kauno Baldai has entered an active expansion phase in 2021, with a building conversion project already well advanced. Currently, a new production building is being built in place of the old premises in Žemieji Šančiai, Kaunas, with investments amounting to more than EUR 20 million. The new plant is expected to be fully operational in 2023.
“However, the situation today has only further highlighted the importance of this expansion. In order to remain competitive in such a challenging environment – both economic and geopolitical – we need to keep pace with innovation. The new plant will not only introduce more efficient production technologies but will also allow us to expand our production capacity and take advantage of the new infrastructure. The building will be more energy-efficient, more comfortable for employees and more sustainable,” says T. Mauricas.
In addition to the new factory project, the team will also focus on uniqueness to help the company establish itself in new markets in 2022. To do this, they are looking for solutions that meet the needs of each market – from more durable, natural materials in furniture to additional or new features.