Monday, 8th December 2008, Velenje, Slovenia

Cancellations of orders in last weeks are causing anxiety

The circumstances on the markets are for Gorenje, due to the global financial crisis and recession from week to week strongly worsening. While we have in the first half of the year, based on a good performance still expected that we will finish the year with the success, and after the third quarter the results from these market circumstances still haven’t major impacts on the performance, but regarding the last quarter we are definitely not satisfied.

We are implementing numerous measures to try to soften the negative consequences as much as possible. These measures are focused on all business areas and on all business processes. They are referring to the further development of the new products, entering into new markets, searching for the alternative lower priced sources, the limitation of the investments of the utmost urgency, Working capital management, the labour cost management over increase of the productivity, flexible utilization of the working hours and on the drastic decreasing of all kind of costs.

The major problem on the markets is that the customers, so our business partners are in the difficulty of getting financial sources to financing the working capital, so they are for this reason by the ordering cautious and selective. Likewise cautious we also have to be by Gorenje, because we don’t want to increase receivables or risking the un-payments. The second reason for weaker demand is also seen in a worried consumers, who are based on permanent blowing of global crises threat in the media and the fear to lose job are especially causes by the shopping of durable goods. At the same time they are hardly get loans, which are an important source for buying of household appliances. In the meantime when is the recession present in the Western Europe for months now, they are feeling it also in the Eastern Europe.

In spite of all measures, Gorenje is intensively implementing, the Management Board estimates, that  the negative effect of numerous cancelling of orders in the last weeks and other foreseen negative factors, might reach the scope up to the one third of the planned net profit in the year 2008.

However but in spite of mentioned obstacles Gorenje is performing better than competitors and is increasing the market shares. Within the sales net-work they are trying to win the more orders as possible, but they are also giving the warning that there will be a difficult first quarter for the next year, because all the household market dropped, and our costumers, particularly from abroad are having difficulties to pay there’s liabilities.

The outlook for the year 2009 is also for our industry unfavourable, and that’s why by Gorenje we are speeding up with the additional measures and are together with the labour union preparing for the different scenarios.

Gorenje, d.d.,
The Management Board