WE ARE ON TRACK TOWARDS OUR STRATEGIC GOALS,
WE CREATE VALUE

We stepped up our sales of premium and innovative appliances

Annual Report 2016 (14,4 MB)

GORENJE GROUP IS CREATING VALUE FOR ITS STAKEHOLDERS IN THE SHORT,
MEDIUM, AND LONG RUN.

With the processes and activities aimed at economic sustainability - business excellence, environmental sustainability, and social sustainability, we efficiently use and advance our resources. These include six capitals that we employ to create and increase value for the Gorenje Group and our key stakeholders.

The main objective of the Gorenje Group remains to be a successful company, one of the best in the world in the field of design and innovation.

Franjo Bobinac, Gorenje President & CEO

Are you satisfied with the Group's performance 2016?

In the Gorenje Group we are satisfied with the performance in 2016, because we have reached all key objectives. It is important that we grew in our most important markets. The umbrella activities of the Gorenje Group grew by 3.4 percent. At the same time, the sales structure was also very good – this includes the product, geographical and brand sales structure. In 2016 we were very good at managing costs, especially the costs of reproduction material, raw materials and logistics. It is important that we increased our market shares in all key markets of the Gorenje Group, as well as throughout Europe. We even slightly increased our sales price index, which means that we are slowly breaking through into higher price categories. At the same time we have significantly reduced our relative indebtedness.

Who are your key stakeholders?

Every group’s objective is to create value for its owners, while at the same time considering all other stakeholders: employees, business partners, banks, the business environment etc. It is of course clear that the shareholders also have their expectations. Value creation for all stakeholders is crucial, while the management of our group tries to balance our short-, medium- and long-term activities. It is important that we are creating long-term value for our Group and trying to be a sustainable company by caring for the environment and also for society, and what is of key importance, for the right economy.

What are your strategic objectives until 2020?

It is very important that we achieved all our main objectives in 2016, which was the first year of the new strategic plan. This way we successfully started implementing our new strategy until 2020. Our key strategic objectives are growth in global markets as well as outside Europe, while at the same time we would like to increase the value of our products and sales in higher price ranges. Our premium brands, such as Asko and Atag, represent an increasingly large share in the structure of products, while our main Gorenje brand is still very present in the homes of consumers not only in Europe, but also outside of Europe. In the coming years we would like to grow globally, with the emphasis on premium ranges, while we will still continue to control costs and at the same time reduce indebtedness. The main objective of the Gorenje Group remains to be a successful company, one of the best in the world in the field of design and innovation. With organisational changes we want to encourage a stronger entrepreneurial nature. Yes, we want to create long-term value for our owners and for all other stakeholders.

In creating value, Gorenje Group employs
six mutually intertwined capitals:

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Financial capital:

financial sources available to an organization for producing goods or rendering services. Financial sources can be obtained through equity or debt, financing, drawing on grants, conducting business processes, and investing.

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Human capital:

knowledge, competencies, and experience of our employees. Their dedication to innovation and improvements in performing the work duties.

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Intellectual (organization) capital:

Gorenje Group brands, intellectual property (patents, copyrights), and tacit knowledge (systems and procedures).

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Social and relationship capital:

relations with investors, suppliers, and business partners, buyers, consumers, local communities, decision-makers, expert and non-government organizations, media, and other stakeholders who have a decisive impact on our operations. Ability to exchange material information with the stakeholders in order to generate value and advance individual and social welfare.

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Natural capital:

water, energy, and other natural resources needed in the process of manufacturing our products.

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Manufactured (infrastructural) capital:

property, plants, and equipment, other machinery and buildings, and infrastructure (including logistics) needed for efficient performance of production process at our manufacturing plants.

INPUTS

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PROCESSES AND ACTIVITIES

We pursue our vision and mission with
integrated thinking and introduction of integrated reporting
about value creation at the Gorenje Group for our stakeholders in the short, medium, and long run.

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EXTERNAL ENVIRONMENT

OUTPUTS AND OUTCOMES

CREATED VALUE

We strive for sustainable development by balancing our economic sustainability - business excellence, environmental sustainability, and social sustainability.

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Annual reports which offer transparent highlights of business operations and clearly identify the business outlooks of the reporter are useful for our work.

Sašo Stanovnik, Head of the Analysis Department, ALTA Group

Is the annual report important to you?

Annual reports are an extremely important source of information for financial analysts. The transparency of the content on the business operations of a company by individual segments is crucial. It is also important that at least some insight into the business outlook of the reporter is defined. In the case of the Gorenje Group, it is therefore about the answer to the question where does the Group see itself in a year or a few years’ time.

Which additional information do you also find useful?

It is very important to provide an appropriate presentation of the advantages of the company over its competitors on the market. It is also desirable to have an insight into the activities and measures taken by the company to maintain these advantages in a competitive environment, or even improve them, as well as to effectively meet the challenges in the environment.

What do stakeholders expect from the annual report?

As a financial analyst, I certainly look differently on the benefits of the annual report than other stakeholders, i.e. from my own perspective. Still, I understand the annual report is perceived as an umbrella document of the company. Therefore, it has to cover and present essential information for all key stakeholders. In addition to the financial public, this also includes the general public and others. It is important that the annual report is based on integrity, bearing in mind the diversity of the stakeholders.

Focus on the core activity Home (share of total Group revenue)

Result in 2016

86.8%

Revenue beyond Europe and its share in total revenue in the core activity Home

Result in 2016

Revenue beyond Europe: EUR 111.6 million; share: 10.2%

Revenue from Asko brand sales and its share in total revenue in the core activity Home

Result in 2016

10.1%

Share of revenue from sales of innovative and premium products

Result in 2016

27.3%

Gorenje Group revenue

Result in 2016

EUR 1.26 billion

Net financial debt/EBITDA ratio

Result in 2016

3.9

Attainment of EBITDA margin

Result in 2016

6.9%

Attainment of cash flow from operating and investing activities

Result in 2016

EUR -11.5 million

Investments into product development (% of Gorenje Group total revenue)

Result in 2016

2.6%

Manufacturing plants

Result in 2016

Key manufacturing plants and information about production volume: Slovenia (61%), Serbia (27%), and Czech Republic (12%).
Reliability, design and energy efficiency of appliances is what is important.

Tatsjana Kranets, Gorenje home appliances user

What do you expect from your home appliances?

As a mother of three children, it is most important to me that my Gorenje appliances are helpers that I can always rely on during household chores – which are quite numerous, believe me.

Their operation is simple and the functions are tailored to the needs of our family. While the appliances work, I have time for what matters most to me. With the help of Gorenje, everyday chores become easier.

What contributes to your buying decisions?

I love the modern design, since the appliances are all uniform in appearance and match perfectly with the lines of the furniture. I have to admit that the superior service which Gorenje provides also contributed to my decision. But the truth is I haven't needed it yet.

Is environmental responsibility important to you?

It is important to me that by choosing energy-efficient household appliances the electricity and water bills are lower, and the effects on the environment, caused during operation of the appliances, are smaller. I am proud to say that our family helps protect the environment with responsible use of household appliances. We are all becoming increasingly aware of the importance of maintaining a clean and green environment which we would like to leave like this to our children.

It is therefore good to know that the Gorenje Group is an environmentally responsible company and that this environmental responsibility is integrated carefully in the products during all periods of their life cycle: during their development and production, as well as during use. And of course, also after the end of the product’s life cycle.

Reporting about all those aspects strengthens my trust in the reliable operation of Gorenje, today and in the future.

Hazardous waste

Result in 2016

0.05 kg/unit

Waste for disposal

Result in 2016

0.006 kg/unit
Gorenje helps shape the vision of Velenje. We welcome reporting which goes beyond the dull numbers and shows us what our local community can expect from the company in the future.

Bojan Kontič, Mayor of Velenje

Velenje and Gorenje: how are they connected?

In Velenje we are continuing with the tradition of economic development and reinforcing our position as an economic centre. Gorenje is our largest economic entity. It is a company which helps significantly to shape our present and has also importantly shaped our past. I am certain it will also be important in the future. We are helping create new jobs. The vision of Velenje is to become an even more successful economic centre.

Does Gorenje affect the quality of the environment?

The decisions of the Gorenje management affect the environmental and social conditions in Velenje, so they are very important for the local community. Gorenje is aware of its social responsibility and contribution to the quality of the environment in which we live. It supports the development of sport and culture. In these areas Gorenje is irreplaceable for Velenje.

Which information about the Gorenje Group are important to you?

Of course, the financial results are important for every company. But the social environment the company operates in wants to know more about its business plans, planned markets and manufacturing locations.

Thus it is important to report about operations in a way that goes beyond the dull numbers and also presents the placement of the economic entity in its surroundings, as well as its plans and expectations. It seems that we can only expect good from the Gorenje Group, and this is important for the local community. We welcome the approach to reporting we are seeing in this year’s annual report of the Gorenje Group.

Share of employees participating in training and education

Result in 2016

68%

Number of work accidents

Result in 2016

Decrease in the number of work accidents by 23% (relative to 2015).

Retailer satisfaction (measured indirectly through sales representative satisfaction with the Salesforce tool)

Result in 2016

Satisfaction of our sales representatives with the visits at our key accounts (in terms of revenue generated with them) on 21 European markets – representatives who are very satisfied with Gorenje (rating 5 or 4): the share rose by 4 p.p. relative to the year before.
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Full report

English (14,4 MB)

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Celotno poročilo

slovensko (14,4 MB)

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