GORENJE, d.d., Velenje

Non-audited Consolidated Financial Report of Gorenje Group for the Period January - March 2004, according to International Financial Reporting Standards.

Gorenje is entering year 2004 with a good business performance

Gorenje Group is this year starting for the first time with Interim financial reporting, according to International Financial Reporting Standards for International Financial Community.

In the 1st Qtr. 2004, Consolidated net revenues from sales amounted to 47,621.1 million SIT, showing an increase of 3,177.6 m SIT or 7.1% over 1st Qtr. 2003 and 23.7% of 2004 Plan.

Net profit for the 1st Qtr. 2004 in amount to 973,153 million SIT reached 18.2% of the projected figure for 2004. Net profit for the period also included the minority interest in the amount of 25.95 million SIT.

Also in the year 2004 the characteristic for European markets is a low level of economic activities, low confidence of consumers and reduction of international competitiveness owing to a weak US Dollar towards the EUR. For the sake of Slovenian entry into the European Union as of 1 May 2004, and due to the abolition of tariff-free treaties, the operating conditions of the Gorenje Group on the markets of Bosnia and Herzegovina, Macedonia and Croatia changed for the worse; according to forecasts, a preliminary entry into the ERM2 system is expected, thus fixing the EUR/SIT exchange rate, which will incur additional cost-pressure to the Gorenje Group.

Apart from the above stated negative factors of business environment, which have been anticipated by the Gorenje Group upon the preparation of the Plan for the year 2004, and to eliminate their effects, the relevant sets of business measures were also planned; nevertheless, the two unplanned and inconvenient business factors occurred at the beginning of 2004: demands of trade unions for salary rise, higher than planned, and unplanned extraordinary price pressure on growth of prices for strategic materials and raw-materials, especially of stainless steel, other steel products and non-ferrous metals.

Should the mentioned costs pressures continue to the second half of 2004, the Management Board estimates that joint negative effect of unplanned negative factors, especially of the price growth for strategic raw materials and materials in the year 2004, might reach the scope up to the one third of the planned net company's results in the year 2004.

Also in the future the Management Board will carry out business activities trying to reduce the negative effects of the mentioned unplanned effects in 2004 and in the coming years, thus in the greatest possible extent reassuring the fulfilment of the planned business targets for the year 2004.

Date: 26. 5. 2004