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Gorenje Announces Strong 2005, Ambitious 2006
Dec 20, 2005
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Velenje, Slovenia-based Gorenje's supervisory board approved a 2006 business plan for Gorenje and its business unit, appliance maker Gorenje Group, on Dec. 16, 2005. Taking into account what it called extremely difficult business circumstances, the board determined that all the major categories of its 2005 business plan were met and its business operations are approaching the figure of 1 billion euros (approx. U.S. $1.2 billion). In view of what it anticipates to be the poor state of the economy next year, the 2006 business plan was conceived "very ambitiously."

Consolidated net revenue from sales in 2005 is estimated at 238,015 million Slovenian Tolars (SIT) (approx. $1,185 million), compared to SIT 213,589 million (approx. $1,064 million) in 2004, and planned for 2006 at SIT 243,244 million (approx. $1,212 million).

Net profit in 2005 are estimated at SIT 4,961 (approx. $24.7 million) for 2005, compared to SIT 4,915 (approx. $24.5 million) in 2004 and planned for SIT 5,079 (approx. $25.3 million) in 2006.

Gorenje said preparing the 2006 Business Plan was made extremely difficult due to important changes in the economic environment, which are expected to continue in 2006, but whose scope and extent is extremely difficult to assess reliably because of their high unpredictability.

According to estimations by Gorenje analysts, no major changes are expected in the business environment in the year 2006. The largest uncertainty is still expected to come from prices of strategic raw materials, especially steel plates, other metals and plastics, as well as components manufactured from these materials. Gorenje's 2006 plan includes the anticipated growth of purchase prices, although the uncertainty of the supply markets make the reliability of such forecasts "highly doubtful."

Gorenje said the second major element affecting the realization of planned business results in 2006 is the implementation of EU Waste Electrical and Electronic Equipment Directive (WEEE) in regard to recycling, which became executable in Slovenia in August 2005. The directive says manufacturers of household appliances are responsible for recycling of their products, which Gorenje says has the potential to result in considerable extra operational expenses. "It is, however, impossible to forecast reliably the actual impacts of the implementation of the Directive in this moment due to the existing ambiguities related to the national legislations in the countries of our operations and the actual date of implementation of the Directive at particular markets," Gorenje's statement said.

Gorenje goals for 2006 include:

  • Continued development of new products and services, resulting in greater market competitiveness, higher pricing levels, realization of higher added value, and better financial returns. Parallel activities will develop solutions for reducing manufacturing and distribution costs of existing products.

  • Continued optimization of the supply chain, including searching for alternative and/or new supply channels to improve pricing competitiveness.

  • Enhancement of manufacturing productivity and efficient execution of production activities.

  • Continued internationalization of production capacities, including the realization of Valjevo Project for the manufacture of refrigerator-freezers and continuation of Russia Project for the manufacture of laundry washing and drying machines.

  • Comprehensive rationalization of logistics, sales and after sales activities.

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