GORENJE, d.d., Velenje

Gorenje business performance in the first three months 2006, successful and in line with the plan; conditions on the sales and purchase markets are still exceptional difficult. About the business performance discussed also the Supervisory Board at the 29. Supervisory Board Meeting, held on May 12, 2006.

Summary of financial report of Gorenje, d.d. and Gorenje Group for period January - March 2006

In the 1st Qtr. 2006, consolidated net revenues from sales amounted to SIT 55,301 million, implying a 2.4% increase over 1st Qtr. 2005 and 23% of the 2006 plan. The revenues from sales for the 1st Qtr. 2006 are not entirely comparable with the figures from the 2005 due to the disposal of both Hyundai companies in July 2005. Considering only the comparable figures, the extent of sales for the Group is increased for SIT 3,732.9 million, or 7.2%.
Gorenje Group EBITDA rose to SIT 4,449 m (SIT 4,214 m), up by 6% and reached 22% of the annual plan 2006.
Profit before tax amounted to SIT 1,284 m, showing 3% decrease in comparison with the 1st Qtr. 2005 (SIT 1,326 m) and realised 21% of the 2006 plan.
Net profit rose by 2% to SIT 1,045 m (SIT 1,027 m) and reached 20% of the annual plan for the year 2006.

In the period January - March 2006, the net revenues from sales of the main company Gorenje, d.d., amounted to SIT 37,025 million, implying a 4.1% increase over 1st Qtr. 2005 (SIT 35,563 m) and 22% of the 2006 annual plan.
Profit before tax amounted to SIT 857 m, showing 5.8% decrease in comparison with the 1st Qtr. 2005 (SIT 909 m) and realised 29% of the 2006 plan. In accordance with the IFRS reached PBT SIT 1,191 m, implying a 38.4% increase over 1st Qtr. 2005.
Net profit rose by 2% to SIT 817 m (SIT 804 m) and reached 33% of the annual plan for the year 2006. In accordance with the IFRS reached net profit SIT 1,048 m (SIT 801 m), implying a 31% increase over 1st Qtr. 2005.

According to analysts, it is unlikely that we will see a significant improvement in business conditions in 2006. The prices of commodities remain the biggest uncertainty, because the prices are still increasing in the year 2006, in particular of sheet metal and other metals, plastics, and components made of these materials. The other major factor affecting the achievability of planned business performance in 2006 is the application of the WEEE Directive, which entered into force in Slovenia in August 2005.

The negative impacts of expected business performance will have to be neutralized as much as possible during the year 2006 above all by the optimization and search for cheaper alternative supply sources, selective price increases of household appliances and enhancement of their sales structure, and rationalization of costs in all segments of operations. Particular emphasis will have to be earmarked for effective launching of the new products and building of a new Refrigerators and Freezers Factory in Serbia, which will start on the production in the October this year. The Management Board will continue to carry out all business operations which are expected to contribute to the final achievement of forecast business objectives for the year 2006.

Please, see the attached file, regarding Financial report Summary of Gorenje, d.d., (according to the SAS and IFRS) and of the Gorenje Group (according to the IFRS), for the period January - March 2006

This announcement will be also available on the www.gorenje.com web-site.

Date: 12. 5. 2006