Utenos Trikotažas Group: Demand for Textile Manufacturing Expected to Recover in Second Half of the Year

2024-02-29    |
Utenos Trikotažas Group: Demand for Textile Manufacturing Expected to Recover in Second Half of the Year

Last year’s sales were severely affected by the global slowdown in demand, including the textile sector. The SBA Textile Group Utenos Trikotažas generated revenues of EUR 22.2 million in 2023, down 35.7% year-on-year. The last quarter of the year stood out for sales of the company’s owned brand, UTENOS, with a jump of 27.4%.

“We are witnessing demand slowly returning to the manufacturing market, but due to the specific nature of the textile sector, it will take more time before any positive shift in financial flows. Inflation, rising interest rates, and geopolitical concerns have led to a sharp contraction in consumption. Many even very strong brands recorded declining sales, with some being forced to close their operations,”

– says Nomeda Kaučikienė, Head of Utenos Trikotažas.

Operating costs reduced by a fifth – capacity remains as usual

In a period of slower sales, Utenos Trikotažas has focused on increasing production efficiency and optimizing operating costs. The decisions implemented have resulted in a reduction of fixed costs by fifth, while the company is capable of producing the same amount as in 2022.

According to N. Kaučikienė, the slowdown in production has enabled the company to continue its strategic transformation, the solutions of which will contribute to the future of the company when demand returns. “Over the past year, we have implemented a number of strategic changes that would have taken 2-3 years to implement under normal conditions. We have significantly reduced production time, streamlined operational management systems, while externally we have strengthened our positioning as a developer and producer of high-quality woolen and organic materials,” says N. Kaučikienė.

Stabilization of the UTENOS Brand

Utenos Trikotažas is currently developing its owned apparel brand – UTENOS, whose products are distributed across the company’s e-shop and 6 physical retail stores. The revenue of this sales segment grew by 27.4% in the last quarter of the year and reached EUR 2.5 million by year-end.

“All the currently operating stores of Utenos Trikotažas are successfully performing – the sales of the online store are stable, and the results of the physical outlets are growing. The brand growth recorded in the last quarter shows that the strategic decisions taken in 2022 have started to yield positive results,” says N. Kaučikienė.

The Group exported 82% of its production

The sales of the largest segment of the Utenos Trikotažas Group, contract manufacturing, decreased by 39.2% to EUR 17.1 million last year. The German-speaking region remains the largest export destination, where Utenos Trikotažas sold products for over EUR 13 million. The Group’s exports accounted for 82.1% of its total revenue last year.

The search for new export markets and strategic changes in the production portfolio started to show a positive impact at the end of the year, with the current intensity of new inquiries several times higher than at the beginning of last year.

“The pipeline of new inquiries leads us to expect a return to our growth trajectory in the second half of the year. By focusing on the production of complex, higher value-added products, we are investing much more time in the development phase, which often takes six months, and sometimes even longer, before actual sales materialize,”

– claims N. Kaučikienė.

Sales of functional-technical clothing produced by Šatrija, a subsidiary of Utenos Trikotažas, fell by 6.8% to EUR 2.6 million last year. The Group recorded a pre-tax loss of EUR 2.530 million, while Utenos Trikotažas, as a stand-alone business, reduced its loss by 7.2% to EUR 2.507 million compared to 2022.

About Utenos Trikotažas

Utenos Trikotažas is one of the largest and sustainable knitwear manufacturers in Central and Eastern Europe. Its specialized focus lies in on-demand ready-to-wear production and jersey fabric development for leading international brands, covering the entire production process from yarn to finished products.

Utenos Trikotažas Group operates three factories – Utenos Trikotažas (Lithuania), Šatrija (Lithuania) and OAO Mrija (Ukraine). Environmental and social responsibility commitments cover all areas of Utenos Trikotažas’ production and operations – from organically farmed natural fibers, the use of chemicals in production, to fair pay for employees and absolute transparency in production processes. Utenos Trikotažas is part of the SBA group.