Gorenje Comments on Financials and Future Goals
Feb 17, 2009
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Slovenian appliance maker the Gorenje Group said that despite the economic slowdown, the company is adapting and ensuring its long-term health.
CEO Franjo Bobinac said, "In [the] first two months of this year the level of orders is lower by 20 to 25% compared to the same period of last year. That’s why it is so important to implement all the accepted measures to face the crisis...from increasing the sales, management of financial and other risks, management of costs, and assuring the positive net cash flow. Labor costs are also big, so payroll taxes should be reduced at a quicker pace. These measures are needed as soon as possible."
To lower costs following the drop in demand, Gorenje has introduced a 36-hour work week, cut production, lowered salaries by 10%, and accepted government assistance in paying wages. The manufacturer can "cope for a period of one year to 18 months," under current conditions, said Bobinac, who personally took a 10% pay cut.
Gorenje, which employs 9000 workers in Slovenia and exports 92% of its production, still predicts a profit in 2008, Bobinac said. The earnings outlook for this year "will be clearer in the coming months," he said.
In addition, the company cuts its estimate for 2008 profit by 32%. Still, Bobinac said that Gorenje "has no problems accessing credit."
The company also commented on its future goals, including its investment in new generation of cooking appliances under the Mora brand, which began in 2008. The company says that since the acquisition, Mora's market share has increased from 50% to 52% in free standing cookers. At the same time, Gorenje said, Mora has become a market leader in built-in appliances and range hoods--a segment in which Mora was previously not present.
In addition, Gorenje said that by setting up a manufacturing plant in Serbia, Gorenje obtained the status of a local manufacturer, thus establishing conditions for retaining its market shares in the long term.
Last, Gorenje noted that merging with the company Atag in 2008 has contributed considerably to the company's growth, and will help it survive the economic downturn.
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