Tuesday, 14th October 2008, Velenje, Slovenia

Gorenje remains optimistic despite turbulence in the financial markets

At Gorenje, we have understood the causes and effects in the market place and resulting sales. Firstly, the financial crisis which erupted in the US financial sector, which then rapidly washed across into Europe and secondly, the cooling down of overall economic activity in Europe, especially in Western markets reflecting a downward consumer trend along with maturing economies and markets.

Despite the current circumstances showing little sign of revival or promise, sales of Gorenje are in line with the planned forecast. The result of this recession, especially in the form of lower consumer demand has been felt strongest in Ireland, France, England, Spain, Italy and also in Germany. The global demand for household appliances is falling, however Gorenje’s sales are comparable and on par with last years results, which means, that in relation to our competitors we are in fact increasing our market share. The fall in demand in Western Europe is being compensated for by very good sales in the Eastern European markets, namely Russia, Ukraine, Czech Republic, Slovakia and Romania. Following the acquisition of Atag in June of this year, we are increasing our sales activities in the Benelux region.

The Management Board of Gorenje has decided that based on the current situation, effects and projected forecast, that it will keep existing plans unchanged for the year and will maintain predicted revenue and profit forecasts. Members of the board, together with all staff members will continue to implement in an intensive manner the planned objectives for this year. Alternative plans for the future will also be reviewed and prepared.

The core business of the Gorenje Group is the manufacturing and distribution of home appliances where technical innovation coupled with design has strengthened its market position and reputation but has also increased the sales of high end, value products. The recent acquisition of the brand name Atag has again reinforced our strategic market position. We would like to point out that Gorenje is ranked among the three most respected manufacturers in the CEE markets. Gorenje has a well-structured and implemented sales and distribution network in more than 60 countries, which ensures less exposure to risk due to the differing market situations in each country.

Alongside Gorenje’s core business activity, Gorenje has cleverly orientated itself into other growth areas. This year ecological and energy operations show great promise and are successfully supporting the home appliance division during these difficult times.

The financial crisis has not affected or touched upon the Gorenje Group to such an important extent. With solid relations in the European Banking sector, Gorenje still has access to financial resources, which the banking system has made available. We are currently strengthening our existing contacts to ensure a re-investment of loans in the future.

The Management Board is convinced that the Gorenje share is a very good long-term investment, yet is currently undervalued. Despite these oscillations, the Board firmly believes that demand will increase, while the internal value of the share is much higher than shown in the market place.