Wednesday, 30th October 2013, Velenje, Slovenia

Gorenje Group announces an updated Strategic Plan for the period 2014–2018

The updated strategy is a response to the changes within the Group and the persistently challenging business environment

On October 29, 2013, the Supervisory Board adopted an updated Gorenje Group Strategic Plan for the period from 2014 to 2018. Gorenje decided to revise its strategy after having completed the process of strategic shifts of manufacturing operations, forging a strategic alliance with the Panasonic Corporation, divesting their furniture manufacturing operations, and reorganizing and optimizing their sales structure, all in the course of the last 18 months. Such changes affect the Group operations. Moreover, the updated strategy deals with the unrelentingly harsh conditions in the markets. 

The updated Gorenje Group strategy includes several scenarios. Deleveraging remains a key goal, to the point where the ratio between net financial debt and EBITDA does not exceed 3.0; this is expected to be accomplished in 2015.

In the course of implementation of the revised strategy, the Group will continue to generate most of its revenue in Europe, while building up its sales in select markets beyond the region. Revenue generated outside Europe is expected to double to around EUR 170 million by 2018. The group expects to increase their market shares in most key markets.

Changes to the Group organization
Since 2010, Gorenje Group has been increasing the share of core activity, i.e. home products and services, in the total revenue. In the last year of implementation of the revised strategy, revenue generated in the core activity are planned at over 90 percent of total revenue; in 2012, they represented nearly 85 %. In order to allow the Group to intensify the focus on core activity development, the organizational structure has been adjusted accordingly. All fields that are not a part of the core activity shall be categorized as portfolio investments.

Strategy supported by key projects
Implementation of the revised strategy and attainment of the goals laid down will be supported by key projects that include, in addition to expanding sales beyond Europe, further development of strategic partnership with Panasonic, reducing complexity at all levels, optimizing the supply chain management, and intensifying the development activities and innovation management.  

Activities to accomplish the strategic goals include sale of upmarket brands
In the last 10 years, Gorenje Group has expanded its brand portfolio, which allows it to address the entire range of customers and price segments. Moreover, sale of products under own brands has been increased. In 2005, in-house brands represented 72 percent of total revenue; today, it stands at 94 percent.

The Group will continue to develop the multi-brand strategy and presence across the price ranges, with particular emphasis on the development of the Asko brand as the global premium brand. Asko has been a part of Gorenje's brand portfolio since 2010 and today, it is present especially in the markets of Australia, USA, and Scandinavia. In the coming years, the Group is aiming to introduce the offer of Asko appliances to other markets in order to boost the sales of premium appliances. The share of upmarket brands (Asko and Atag) is expected to exceed 25 percent in total Group revenue in 2018.

Consolidation of manufacturing operations following their strategic relocation 
In just over a year and a half, Gorenje completed the planned shifts of manufacturing plants between Sweden, Finland, Czech Republic, Slovenia, and Serbia. It also transferred the production of dishwashers from Sweden to Velenje where production has already been launched. Thus, the Group has completed the most extensive production restructuring in its history. In the coming years, the focus will be on consolidation and development of the existing manufacturing plants which are now concentrated in three countries: Slovenia, Serbia, and Czech Republic.

Gorenje President and CEO Franjo Bobinac: "In the last 10 years, Gorenje has made some important steps to develop its operations. This includes internationalization of manufacturing, three acquisitions within the industry, increase of sales in the largest European markets, i.e. Germany and Russia, launch in some new markets, and increase of sales under our own brands. This year, drawing to a close, has been particularly challenging as a result of the shifts of production and some extraordinary external factors. Successful restructuring of manufacturing operations, other activities that are currently in progress, and the key projects laid down in the updated strategy will allow us to remain focused on generating long-term growth and competitive edge of the Gorenje Group for the benefit of the customers, shareholders, and employees."