Bloomberg News

Slovenia’s Gorenje 2011 Net Slumps 55% on Declining Demand

March 12, 2012

Gorenje Group d.d., Slovenia’s biggest appliance maker, reported a 55 percent decline in 2011 profit as raw-material costs increased and demand for its products dropped.

Net income plunged to 9.1 million euros ($11.9 million) from 20 million euros in 2010, the Velenje, Slovenia-based company said in a statement to the Ljubljana stock exchange today. Revenue advanced 2.9 percent to 1.4 billion euros.

Gorenje (GRVG), Slovenia’s second-biggest exporter after Renault SA’s subsidiary in Novo Mesto, said the business environment last year was “hostile” and sales “under heavy pressure from high raw and processed material prices, and currency and credit risks, paired with feeble consumer demand.”

The company this year plans to reduce debt further and refinance some liabilities as well as cut costs and boost sales by “restructuring its manufacturing sites,” Gorenje Chief Executive Officer Franjo Bobinac wrote in the statement.

Gorenje lowered debt by 4.7 percent in 2011 by “intensive divestment of non-core assets.” The share of long-term loans in total liabilities rose to 62.5 percent from 53.9 percent, according to the company’s statement.

The company will focus on global expansion, including the Middle East and Hong Kong, “responding to expected low growth on European markets, where the bulk of our sales are now generated,” according to the statement.

Its shares slumped 4.8 percent to 4.55 euros at 11:33 a.m. in Ljubljana, falling for the first time in four days and valuing the company at 72 million euros.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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