Sales of the Utenos Trikotažas Group increased by one-fifth in Lithuania
During the first half of 2020, the Utenos Trikotažas textile company group controlled by SBA, sold products and provided services for a total of EUR 14.3 million, i.e. 9% less than during the same period in 2019. The sales revenue of the company Utenos Trikotažas also dropped by 9% totalling EUR 12.5 million. In this difficult period, the sales revenue of Šatrija, producer of functional-technical clothing, shrunk by 10% to EUR 1.7 million.
“As a result of changes in operational circumstances due to coronavirus, we urgently re-oriented some manufacturing by focusing on efficiency, strengthened the channels of e-commerce and attracting new customers. Although at the beginning of Q2 we predicted a two-digit drop in sales, during the first half-year period these losses were partially amortized,” Petras Jašinskas, Managing Director of Utenos Trikotažas, said.
Record growth of own brands
With strong impact of the pandemic in Lithuania and in the export markets of Utenos Trikotažas, the main business of the company – contract manufacturing – slowed down in Q2 2020. Shortly after the lockdown in Lithuania, Utenos Trikotažas was one of the first to undertake mass production of face masks, which partially helped compensate for losses, continue production and save jobs.
Sales of contracted products in the first half of the year totalled EUR 9.6 million or 20% less than during the same period in 2019, while the Group’s sales in Lithuania grew totalling EUR 3.9 million or 21% more than in 2019.
In Q2 2020, sales of own brands – UTENOS and ABOUT – of Utenos Trikotažas grew at a record rate. At EUR 2.9 million, sales revenues in the first half of the year were by 58 % higher than at the same period in 2019 when sales revenues totalled EUR 1.9 million. This spike was due to a number of coronavirus-related reasons: well developed e-commerce, far more active online sales during the lockdown, additional flow of customers due to the closure of physical shops, and active sales of face masks. In total, more than 400,000 face masks of Utenos Trikotažas were sold in the first half year, inclusive of online sales and contract manufacturing.
Despite a difficult quarter operations continue at full capacity
In the first half of 2020, the Utenos Trikotažas Group incurred losses of EUR 1.3 million before tax (EUR 22 thousand in 2019). The losses of the company Utenos Trikotažas totalled EUR 1.1 million before tax (EUR 64 thousand in 2019).
The EBITDA indicators of the Utenos Trikotažas Group and the company Utenos Trikotažas were minus EUR 509 thousand and minus EUR 709 thousand respectively (EUR 471 thousand and EUR 285 thousand in 2019).
The quality of working capital of Utenos Trikotažas was assessed in view of a significant change in operational risk and provisions were made. Due to the changed economic circumstances, impairment of EUR 0.9 million was recorded for inventories and accounts receivable in Q2 2020. One-off salary costs and losses due to a significant change in the exchange rate of the Ukrainian Hryvnia also had a negative impact on the performance.
“Q2 2020 bore the brunt of the negative circumstances; the forecast for the rest of this year is more positive. Coronavirus has had an unambiguously negative impact on the textile sector as a whole, on the demand for products and the solvency of customers. The introduction of the lockdown during the pandemic caused declining sales for many clients of Utenos Trikotažas and therefore we had to review, postpone or cancel planned orders. Despite the difficult quarter we are working at full capacity and are strengthening our positions in the field of contract manufacturing,” Jašinskas said.
If the situation in the textile market remains the same, the company plans to retain the current number of employees and is already considering more staff for its largest sewing unit.