Utenos Trikotažas Group reports EUR 7.5 million revenue in Q1
With the severe impact of the pandemic on the textile sector, the Utenos Trikotažas Group owned by SBA has earned EUR 7.5 million from sales in Q1 2020 – 3.5 % less than a year ago. The sales of the company Utenos Trikotažas this year were by 0.9 % down totalling EUR 6.7 million.
“We have recorded a relatively small decrease in quarterly sales because the first two months of the year were sufficiently good, but the effect of the coronavirus outbreak will be more strongly felt in the coming quarters. In response to the pandemic, we have refocused part of our production and started offering multiple-use face masks. We have further increased focus on efficiency and strengthened our e-commerce channels,” Petras Jašinskas, Managing Director of Utenos Trikotažas, said.
Manufacturing on demand has been declining and own brands have been growing
Manufacturing on demand at Utenos Trikotažas decreased by 8.3 % in Q1 and sales stood at EUR 5.4 million. The sales revenue of Šatrija, the subsidiary of Utenos Trikotažas which produces functional-technical clothing, decreased by 14.7% compared to last year. In Q1, the Group exported 77.8% of its production.
Over the first three months, revenue from own brand sales of Utenos Trikotažas – UTENOS and ABOUT – stood at EUR 1.3 million, i.e. 39% more than at the same time in 2019.
In Q1 2020, the Utenos Trikotažas Group incurred EUR 0.2 million pre-tax loss, while at the same time last year it earned EUR 58,000 profit. Meanwhile, the company Utenos Trikotažas earned EUR 76,000 before tax in Q1, whereas the pre-tax profit during the same period last year totalled EUR 22,000.
The Group’s EBITDA was EUR 320,000 in Q1 this year or an increase of 6.3% compared to the same period last year. The EBITDA of Utenos Trikotažas was EUR 240,000 or 14.6% more than in Q1 2019.
The impact of COVID-19 on Utenos Trikotažas
After the introduction of the quarantine by the Government, all shops of Utenos Trikotažas in Lithuania were closed. Due to the suspended operations of the shops, a loss of around EUR 0.1 million was incurred. With the relaxation of quarantine conditions in Lithuania, since 24 April the operations of the shops resumed, but it is likely that due to the ongoing quarantine and the economic situation this year’s sales will not reach the 2019 levels.
Coronavirus has had a significant impact on the textile market globally. Utenos Trikotažas faces delays in payments or insolvency of some customers. Manufacturing on demand fell by 24% in March 2020, compared to the same time last year, the number of the company's future orders also decreased. This will have a negative impact on the sales of on-demand products in Q2 and Q3 2020.
At present, the sewing unit, which continues to operate at maximum capacity, employs the largest number of employees. Other units work at a lower capacity than before the pandemic.
Utenos Trikotažas plans to save about 90% of its employees. The remaining employees are already affected by complete downtime, they will be offered to terminate their contracts with full benefit payment or, if possible, change their position.
In the adverse economic circumstances, the management is focusing on efficiency, reviewing costs and operating processes of the company, paying particular attention to the day-to-day management of cash flows and working capital. These measures are expected to be sufficient to maintain the maximum number of employees under the circumstances and ensure the long-term sustainability of operations.
Since the impact of COVID-19 on the economy of the country and the main export markets as well as the final duration of quarantine are unknown, the management cannot fully assess the impact on the Group’s activities and performance in 2020.