Gorenje Reports Higher Revenues but Lower Profits for 2017

By , 12 Jan 2018, 13:47 PM Business
The Asko dryer The Asko dryer Photo: gorenjegroup.com

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Strong sales lift revenues, but higher costs cut profits. 

January 12, 2018

The STA reports on January 12, 2018, that the Gorenje Group ended 2017 with EUR 1.307bn in revenue, up 3.7% from 2016, with net profit dropping to EUR 1.2m from EUR 8.4m the year before. Operating revenue almost halved to EUR 21.7m from EUR 40.2m, the Velenje-based maker of home appliances said on Friday.

Revenue growth was fuelled mostly by sales in Russia, Ukraine, the Netherlands, markets in the Middle East, US, Asia and Australia.

While the group ended the year in the black, the profit is much below its plan for 2017, which was EUR 13m.

"The company has reached its plans in terms of revenue despite a difficult situation on the markets in the second half of the year, and has made profit for the ninth consecutive quarter," CEO Franjo Bobinac said in a press release.

The profit was much lower than planned because of a big rise in prices of raw materials, lower sales of home appliances in some markets, especially in Germany and higher labour costs.

Another reason were higher production costs related to last year's launch of various new-generation home appliances.

At the end of last year, Bobinac warned that end-year profit was at risk due to higher prices of raw materials and lower sales in some markets.

The business newspaper Finance reported yesterday that the group's profit would be minimal, saying Gorenje would try to avoid ending the year with a loss by selling its contract on Indonesian coal to utility Energetika Ljubljana.

The group's worse-than-expected performance was also the reason for a recent shareholder meeting, at which Dutch company Home Products Europe tried to overhaul the supervisory board to eventually replace the management and restructure the group.

Today, the group also released its business plan for 2018, envisaging EUR 8.1m in profit and EUR 1.33bn in sales revenue.

EBITDA is to increase by 13% to over EUR 86m and EBIT by 16% to around EUR 25m.

The company said it would continue focussing on its core business, divesting non-core businesses, with Bobinac stressing this was the right way to go.

It plans to increase sales of high-end and innovative products, increase sales on non-European markets and find a strategic partner to secure its long-term development.

Gorenje's largest single owner is state-run fund KAD (16%), followed by the International Finance Corporation of the World Bank (11.8%), Panasonic Corporation (10.7%), a holder of a fiduciary account with the Polish KDPW with (7.7%) and Home Products Europe (5%).

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