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GORENJE, d.d., Velenje

Gorenje announces the performance estimate for this year and the business plan for the year ahead

Focus in 2013 on completing the restructuring of manufacturing operations

Pursuant to relevant legislation, the company Gorenje, d.d., Velenje, Slovenia, hereby informs the shareholders and the public of the following:

Velenje, December 18, 2012 – Gorenje Supervisory Board was presented the performance estimate for the year and approved the business plan for the year ahead. In 2013, Gorenje is planning revenue of EUR 1.3 billion, which is 4.5% more than the estimated figure for this year. Sales will rise especially in the markets where average profitability is higher (Russia, Ukraine, Slovenia, Czech Republic, Poland, Slovakia, and China); sales in Germany will rise as well. The company management stressed that the following year will be highly challenging as market conditions will remain harsh and the company will still be undergoing strategic restructuring which involves re-locations of manufacturing operations. The re-locations will be completed in autumn 2013, generating savings of approximately EUR 15 million per year starting in 2014. Divestment and reduction of debt remain the key goals for the year.

2013 affected by market conditions and restructuring of manufacturing operations

Market conditions in the following year will remain hostile to sale of durables. In addition, Gorenje's operations will be under pressure due to the expenses related to the strategic restructuring of manufacturing operations. Majority of these activities is scheduled for next year.

Restructuring of manufacturing operations was launched this year and the effects of the first re-location from Finland to Czech Republic can already be seen in the last quarter of this year. By February next year, production of free-standing refrigerator-freezers, re-located from Velenje, Slovenia, will be launched in Serbia (built-in refrigerator-freezers will still be produced in Velenje). Furthermore, Gorenje is shifting the entire production of washing machines, dryers, and dishwashers from Sweden to Velenje. This will increase the share of appliances with higher profitability in Velenje, which is also important in view of efforts to provide jobs in Slovenia. 

Full effect of the restructuring of manufacturing plants will be seen in 2014 and beyond; it is estimated at EUR 15 million per year. The company is also carrying on the optimization of purchasing, logistics, labour, and other costs.

Gorenje President and CEO Mr. Franjo Bobinac: "We are in the midst of one of the most challenging processes of strategic restructuring of manufacturing operations in the 62 years of Gorenje's history. Sales organization, too, is being adjusted to the new challenges, and our corporate governance is being upgraded. These steps are very strenuous for all employees; however, they are indispensable for stable development of the Gorenje Group."

Highest growth of sales in Russia and Ukraine

In the coming year, Gorenje Group is planning revenue of EUR 1.3 billion. The highest growth is expected in Eastern Europe (Russia, Ukraine, Poland, Slovakia, and Czech Republic). Sales will also rise in Slovenia, Germany, and markets beyond Europe (China, Australia, and the Middle East). Selective increase of prices in some markets, higher sales in markets where profit margins are higher, and higher sales of more profitable appliances are planned to increase the value of sales by 6.1% in the core activity of Home products. 

One important generator of growth and profitability are the products with innovative features, sophisticated design and high energy efficiency. Hence, Gorenje will introduce in the coming year the new Gorenje Simplicity line, appliances with innovative functions for a healthy lifestyle, new generation of 600-mm refrigerator freezers with antibacterial technology etc.

Gorenje's profit to rise in 2013

In the coming year, Gorenje Group is planning EBITDA of EUR 96.7 million. This year, EBITDA is estimated at EUR 86.3 million.

Profit is planned at EUR 4.2 million. According to Gorenje's estimates, the Group will wrap up the year with EUR 0.1 million of profit, after seeing loss of EUR 6.4 million at the three-quarter mark.

Upon the announcement of the performance estimate for 2012, Gorenje disclosed that in addition to December sales, results can also be affected by divestment activities which have not been completed yet, as well as the expenses related to the four-hour work stoppage due to the unannounced strike on December 12.

Capital structure to improve in 2013

Upon today's announcement of the business plan for the following year, Gorenje Group also announced its activities to obtain additional capital. The company will resume the activities of financial restructuring and reduction of debt.  

Disclaimer: The English text for all announcements is for information purposes only!

The information in this announcement will be available on the official web site of the company Gorenje, d.d., Velenje, Slovenia, www.gorenje.com, for at least 5 years from the date of this announcement.

The Management Board of Gorenje, d.d.
Date: 18.12.2012
Attachments:  Business Plan 2013