Bloomberg News

Gorenje Chief Sees Revenue Growing on Emerging Markets Gain

December 20, 2011

(Updates with CEO comment in third paragraph, shares in fifth paragraph.)

Dec. 20 (Bloomberg) -- Slovenian appliance maker Gorenje Group d.d.’s annual revenue will rise to 1.5 billion euros ($1.9 billion) through 2015 as it focuses more on emerging markets because of the European economic slump.

The Velenje, Slovenia-based company will focus on growth in markets such as China and Brazil in coming years, with revenue for this year set to reach 1.4 billion euros on net income of 9.2 million euros, Chief Executive Officer Franjo Bobinac told reporters today at the company’s headquarters.

Gorenje is among the export-oriented companies that need to adjust their strategies to compensate for damped European demand because of a widening sovereign debt crisis. The biggest risks to Gorenje’s growth targets are euro-region turmoil, high commodity costs and rising jobless rates, Bobinac said.

“Since there is great uncertainty in Europe, we will focus on emerging markets, especially big cities like Sao Paulo in Brazil, New Delhi and Mumbai in India and Beijing and Shanghai in China,” Bobinac said.

Gorenje, which has acquired rivals Asko Group of Sweden and Atag BV in Netherlands since 2007 to expand in Europe, wants to remain an independent company even as its share price is at “historic lows”, the CEO said.

Rising Shares

Gorenje rose for a third consecutive session, advancing 1.2 percent to 4.10 euros at 11:55 a.m in the capital Ljubljana. The stock lost just below 70 percent of its value this year which compares with a 30 decline by the benchmark SBITOP index of six most-traded stocks in Slovenia.

The Slovenian company, the second-largest exporter after the Renault SA unit in Novo mesto, has given up plans to boost capital this year and may move some of its production outside the country to lower costs, Bobinac said.

The margin for earnings before interest taxes and depreciation will be “above 5 percent” by 2015, the company said in documents released to reporters today. Free cash flow will total 40 million euros in 2015, it said.

High prices for raw materials will cost Gorenje 12 million euros, Bobinac said. Gorenje gets a third of its revenue from outside euro region and currency risks are increasing in Russia, Serbia and Poland, he said. Revenue will remain at 1.4 billion euros next year, while net income will advance to 13.4 million euros.

“The new government should focus on easing the tax burden for companies and reforming the labor market,” Bobinac said.

Ljubljana Mayor Zoran Jankovic is seeking to form a new Cabinet after a surprise victory in a Dec. 4 snap election. The new administration will need to tackle rising debt, a looming recession and a threat of credit-rating downgrade by the ratings services, such as Standard & Poor’s and Fitch.

--Editors: Douglas Lytle, James M. Gomez

To contact the reporter on this story: Boris Cerni in Ljubljana at

To contact the editor responsible for this story: James M. Gomez at

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