Ready for new challenges SBA Group

READY FOR NEW CHALLENGES

The SBA Group is one of the largest holding groups in Lithuania, comprising 26 companies operating in the furniture, apparel and other sectors. It operates in Lithuania and beyond, supplying almost 40 countries. Victoria Hattersley talks to Egidijus Valentinavicius, the vice-president of business development, to find out more about the group’s various activities and plans for diversification.

The SBA Group was established in 1990 at a time when Lithuania was making its first steps as a free market economy. Today, following several strategic developments, it is a major holding company which is active in several business areas, although the largest part of its revenue comes from furniture and clothing. It currently has five furniture factories in the domestic Lithuanian market and two dedicated to the production of clothing.

The majority of the group’s product lines are aimed at the mid-range segment of the market, which is where it is planning to stay. Mr Valentinavicius explains: “In both our eastern and western European markets we try to focus on the middle segment. The reason for this is that we have a great deal of proven experience in this area and our customers know we can offer good value combined with quality.”

Three furniture lines

SBA’s furniture business currently contributes most to its turnover, and within this area it operates across three distinct strands. The first of these is production for large retail chains, in particular the Swedish giant Ikea. In fact, at the end of 2012 it will be opening a new production facility in Russia, dedicated solely to producing furniture for Ikea. This will include value-added furniture covered in natural veneer and lacquer, combined with chipboard and solid wood. Also produced here will be flat-pack items of furniture such as cabinets and chests of drawers. Because of this opening of this new facility, SBA expects to see a great deal of growth in this market in the coming years.

The second key branch within the furniture production area is SBA’s development of its own product lines under the PARRA brand name. This includes bedroom, diningroom and living room furniture and is mainly sold on the Russian market through franchising agreements or its own retail outlets.

The third major line is the development and branding of upholstered furniture, mainly sold throughout western Europe – particularly Germany – and Scandinavia. Mr Valentinavicius tells us: “In this business line, we are expanding

Egidijus Valentinavicius, vice-president of business development

and growing quite successfully. Our model is to get into partnership with one of the best furniture designers in Europe to produce high quality, unique furniture which we can market as a medium-priced product. Last year we successfully presented our products from this line at the Milan and Cologne furniture fairs.”

Diversification is key

SBA’s second biggest area of production, apparel, is operated from three factories: two in Lithuania and one in Ukraine. It is currently in the process of marketing its own line of massproduced clothing to sell to major retailers in the eastern European countries and Russia, such as H&M.

But the company’s activities go way beyond furniture and apparel. As a holding company with the ability to adapt quickly and efficiently, Mr Valentinavicius explains that SBA is always looking for new challenges and new areas in which to expand. “Our core business is furniture but we are very concerned that the diversification of our business continues. For example, we are looking to move into the food processing sector next year. We are open to all alternatives because we feel that our group has the resources to develop efficient production in all areas.”

The group also operates in real estate development, where its activities have a distinctly environmental focus. For example, in 2008 it was involved in the development of one of the most modern and eco-friendly business centres in the Baltic states, in Vilnius. “We also plan to develop environmentally friendly office buildings in the major cities of Lithuania. There will be a lot of eco-friendly features to these, including the use of solar energy for heating and lighting purposes and natural heating and cooling systems.”

It is not just in real estate development that the SBA group is concerned with sustainability. This issue is in fact a very real priority throughout all its activities. Its furniture, for example, is produced along eco-friendly lines. It uses zero-emission chipboard, natural veneers and water-based glues and coatings.

Looking ahead

As for the future of the SBA Group, Mr Valentinavicius is keen to stress that development will come through both organic growth and acquisitions. “Organically, we will be growing through the creation of added value products and higher efficiency, but we will also always consider acquisitions because we have the resources for that, and the diversification of our portfolio is our focus.”

In terms of sales areas, the group will continue to focus on European markets, maintaining a good balance between the east and west. Part of its strategy to continue its growth in its core markets is regular participation in trade fairs, particularly for its furniture business. “We will be participating at the Moscow furniture fair in November and in the Cologne furniture fair in January 2013. We will also have our own stand in Milan in April of that year.” n