The Supervisory Board of Gorenje discussed on 28 May, 2009 the interim report of the Gorenje Group and Gorenje, d.d., for the period January-March 2009 and the estimation of the performance till the end of the year. With a considerable drop in business activities the Gorenje Group has been sharing the same fate as other household appliance companies. Consolidated sales revenues amounted to 286.613 million euros, a decline by 5.6 percent in comparison to the last year first quarter revenues. In order to neutralize the negative impacts of the crisis Gorenje is focusing on generating free cash flow, increasing market share and maintaining productive workplaces.
In 2009, the global economy has been suffering its worst shock in the history. Gorenje has been facing such harsh business conditions for the first time in the past 20 years. In order to defy the crisis, the company is focusing on three objectives: generation free cash flow, increasing market share and maintaining productive workplaces.
With a considerable drop in business activities, the Gorenje Group has been sharing the same fate as other household appliance companies. Consolidated sales revenues amounted to 286.613 million euros, a decline by 5.6 percent in comparison to the last year first quarter. Ukraine, Croatia, Russia and Romania that have suffered low liquidity and increased credit risks contributed mostly to the fall in sales whereas in Germany, Austria, Serbia and in the Czech Republic Gorenje increased sales and market share. A decrease in business activities due to structural changes of the product range and a decrease in inventory had the impact on EBITDA (earnings before interest, tax, depreciation and amortisation) which amounted to 7.1 million euros.
The scales tipped in favour of low-cost products and Gorenje has been adapting its product range offer to the trend. The fridge-freezer programme suffered the greatest drop in sales followed by the cooking appliance programme which has been currently promoting the new generation of cooking appliances. The performance of the fridge-freezer factory in Serbia and the kitchen-range factory Mora in Czech Republic was positive in the first quarter 2009. In 2008 acquired Dutch company Atag also performed better than expected.
Due to the temporarily unadjusted process structure and its costs to the decreased sales (costs of services and labour costs), cost-cutting that did not keep pace with the drop in sales (the use of raw materials and materials valued at prices exceeding the currently effective market prices) as well as less favourable conditions in the financial part of operations (financing costs, insurance costs) profitability weakened – the net loss in the first quarter amounted to 14.74 million euros.
Since positive effects of the cost-cutting measures regarding material, service and labour will start to have impact on business results from the second quarter onward, Gorenje Management Board announced that the results will develop in the positive direction in the following months focusing on generating free cash, increasing market share and maintaining productive workplaces.
Gorenje has been paying special attention to labour costs as it bound itself at the very beginning of the crisis that it will make the best of all available possibilities in order to maintain productive workplaces. The company believes firmly in the knowledge and commitment of its employees that will be needed when business activities strengthen after the crisis, which according to the current predictions will have not ended by the end 2009.
Therefore, Gorenje greets and supports the law on partial salary refund that was adopted by the Slovenian Parliament on 27 May, 2009. According to the law employees that are included in the measure stay employed in Gorenje and enjoy all rights deriving from the employment relationship. After the end of the so called waiting period at home, the employees return to work. In order to enable employees to be active, to stay in contact with the company and colleagues as well as to increase their chances for further employment, Gorenje will prepare in cooperation with the Employment Office education and qualification programmes that will represent 20 percent of the waiting period.
The Supervisory Board estimates the measures of the Management Board as adequate, appropriate and effective and it is supporting the efforts of the Management Board to reach the objectives.