At today's session, the Supervisory Board of Gorenje, d.d., adopted the Consolidated Annual Report of the Gorenje Group and the Annual Report of its parent company Gorenje, d.d., for 2011, and found the performance solid considering the harsh business environment. Furthermore, the Supervisory Board appointed upon proposal by the President and CEO Mr. Franjo Bobinac as the person responsible for formation of the Management Board and by the Supervisory Board HR Committee, Mr. Peter Groznik as the new CFO, i.e. Management Board member in charge of finance and managerial economics. He shall succeed Mr. Marko Mrzel who was appointed Gorenje CFO on March 3rd 2011; as of January 1st 2012, Mr. Mrzel was appointed the company CSO (Management Board member in charge of sales of major and small home appliances).
The home appliance industry was under even greater pressure in 2011 than in the year before. The European market in which Gorenje generates most of its revenue shrunk by 1.3 percent after growing by 2.1 percent in 2010. Profitability of the industry was under immense pressure of mounting prices of raw and processed materials. In fall, the raw material shock started to subside; however, the prices of raw and processed material, representing the highest single cost in the overall cost of home appliance production, remained high. Excess capacity in the industry made it impossible to shift the effects of these price hikes to downstream prices.
Relative to 2010, Gorenje Group increased its revenue by 2.9% to EUR 1.4 billion.
Operating profit (EBIT) of EUR 36.5 million was 35.3% lower than in 2010; however, majority if this decrease is due to the effects of Asko takeover and divestment of Istrabenz Gorenje. After adjusting for these effects, EBIT amounted to EUR 41.1 million, which is comparable to the 2010 figure. Profit after tax reached EUR 9.1 million.
Last year, Gorenje Group exceeded three of its goals in financial operations: free cash flow, standing at EUR 35.8 million, was 23% higher than planned; intensive divestment activities led to a 4.7-percent decrease in debt relative to 2010; and the share of long-term borrowings was increased from 53.9% to 62.5% compared to the year before. Considering the persistently restricted access to sources of financing, this is an important achievement in terms of financial consolidation of our operations.
Investment amounting to EUR 47.5 million was allocated predominantly for development of new products such as the new generation of washing machines and dryers, which consolidate the Group's standing in the market, and for technical equipment.
Peter Groznik is the new Gorenje CFO
At today's session, the Supervisory Board appointed upon proposal by the President and CEO Mr. Franjo Bobinac as the person responsible for formation of the Management Board and by the Supervisory Board HR Committee, Mr. Peter Groznik as the new CFO, i.e. Management Board member in charge of finance and managerial economics. He shall succeed Mr. Marko Mrzel who was appointed, consistently with the new distribution of Management Board member responsibilities, the company CSO as of January 1st 2012. The new distribution of Management Board member responsibilities represents a shift from divisional organization of the Management Board to functional organization. It is a part of the broader reorganization process and revision of corporate governance, which is aimed at the attainment of the goals laid down in the 2012-2015 Strategic Plan.
Mr. Peter Groznik graduated in 1996 at the Faculty of Economics in Ljubljana. In 2003, he completed his PhD studies of finance at the Kelley School of Business at the Indiana University. He is a lecturer for several courses on finance at the Faculty of Economic at the University of Ljubljana; from 2004 to 2005, he was a lecturer and visiting professor at the Kelley School of Business.
Throughout his professional career, he has been active in business administration as well. From March 2009 to September 2010, he was the CEO at KD skladi (KD fund management). Prior to that, he was the head of asset management at various companies of the KD group. He is the owner of the investment consultancy Northgrant and a partner at the company BTP Indegra. From 2007 to 2009, he was a Supervisory Board member at Telekom Slovenije; since 2010, he has been a Supervisory Board member at Pivovarna Laško. In September 2011, he started working with Gorenje as an independent consultant on financial issues.
Management Board and Supervisory Board propose dividend payment
At today's session, the Supervisory Board also confirmed the proposal by the Management Board on the allocation of distributable profit for 2011. The Management and Supervisory Board shall propose to the Shareholders Assembly to allocate a part of the distributable profit in the amount of EUR 2.4 million for gross dividend payment of EUR 0.15 per share, while the remaining part of the distributable profit of EUR 3.1 million shall remain unallocated.
As for the years 2008, 2009 and 2010, Management Board members shall waive their right to a performance bonus for 2011 despite the fact that profit was made and that the goals regarding free cash flow as laid down in the annual plan were exceeded.
At today's session, the Supervisory Board also confirmed the agreement signed between the Gorenje Management Board and the representative trade unions at Gorenje on maintaining the level of employment in Slovenia during the implementation of manufacturing operations optimization project planned for the 2012-2015 strategic period.
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