Business report
Managing our perations


Performance analysis



Performance analysis includes information for the Gorenje Group and the company Gorenje, d.d.; the comments, however, pertain mostly to the performance of the Group.

  • Group revenue amounted to EUR 1,245.6 million, which is 0.4% more than in 2013. It roserelative to the year before in both Home and Portfolio Investments segment.
  • Revenue in the core segment Home amounted to EUR 1,065.9 million, which is 0.1 percent more than in 2013. Adjusting for the effect of the changes in exchange rates, organic growth in the Home segment would have amounted to 3.8%.
  • EBITDA reached EUR 86.5 million, which is an improvement of 10.6% over the year 2013. EBITDA margin was improved by 0.6 percentage point to 6.9%.
  • EBIT stands at EUR 43.5 million, which is 19.8 percent more than in 2013. EBIT margin was improved as well; at 3.5%, it was 0.6 percentage point higher than in 2013.
  • Profit for the period stands at EUR 1.2 million, which is an improvement of EUR 26.2 million over the year 2013 (when a loss of EUR 25.0 million was reported).
  • Total financial liabilities as at the end of 2014 amounted to EUR 367.6 million, which is EUR 29.8 million less than as at the end of 2013. Net financial liabilities amounted to EUR 331.8 million, which is EUR 2.1 million less than as at the end of 2013.
  • The Group’s financial stability was improved considerably as a result of higher EBITDA and lower net financial liabilities. Net financial liabilities to EBITDA ratio as at the end of 2014 was at 3.8, or 0.8 less than in 2013.

Gorenje Group performance

EUR million






2015 plan















EBITDA margin (%)














EBIT margin (%)







Profit for the period/year







ROS (%)







Net financial liabilities







Net financial liabilities / EBITDA







Our sales revenue in 2014 amounted to EUR 1,245.6 million, which is 0.4% more than in 2013.


Revenue growth was the highest in the business segment Portfolio Investments (+2.4%).

Revenue in the core segment Home rose by 0.1 percent despite the negative effect of rouble depreciation on sales (especially in the last quarter of 2014) and turmoil in Ukraine.

Adjusting for the effect of the changes in exchange rates, organic growth in the Home Segment would have amounted to 3.8%.


Currency fluctuation had a notable impact on sales, especially in the markets of Eastern Europe and beyond Europe. Other categories aside (currency hedging, adjustment of prices in the markets, product structure etc.), the changes in exchange rates1 had the following effect on the Group’s organic revenue growth in our key markets:


Currency effect on revenue

Actual revenue


Actual 2014 revenue at 2013 exchange rates

Actual revenue


Actual growth (%)

Organic growth (%)

 EUR million















Rest of world





















In the Home segment, sales increased in the markets of Germany, Austria, Czech Republic, Slovakia, Hungary, Slovenia, Bosnia and Herzegovina, Romania, Bulgaria, Caucasus, Australia, and North America. Despite the hostile macroeconomic conditions, revenue was higher than in the year before in Russia as well.


Revenue was lower than in 2013 in the markets of Ukraine, Scandinavia, Greece, Belgium, France, and Kazakhstan. Lower sales in Ukraine are a result of the political turmoil in the country. Nevertheless, we largely succeeded in retaining our market position in this country and to slash our operating costs and trade receivables, thus laying down solid foundations for the time when the market starts to recover.


Concentration in distribution and the consequent competitive pressure in the markets of Denmark and Sweden resulted in a loss of 0.9 percent of our market share2. Operating costs were adjusted to the lower sales. However, we succeeded in reversing the sales trends in these markets to growth in the second half of the year with the measures we had introduced.


Aggravated macroeconomic conditions in Russia (particularly in the last quarter of 2014 when rouble depreciated dramatically) had a notable impact on our sales activities in this market. In December of 2014, our sales prices were further adjusted to the rouble exchange rate. Despite the price hike, both our sales in terms of volume and revenue measured in local currency rose. Our euro-denominated revenue grew as well, but at a considerably lower rate than planned. We attained the annual growth rate by expanding our offer (sale in all product categories). We also adopted a number of measures to adjust the sales organization costs. Most rouble cash flows were hedged with forward contracts.


In markets beyond Europe, our sales rose by 10.7 percent. The highest growth of sales was seen in the markets of North America, Australia (sale under our own premium brand Asko) and the Far East.


1The effect of change in exchange rates on organic sales growth is determined by calculating the value of actual revenue in local currency in 2014, translated into EUR based on average exchange rates for particular currencies effective in 2013. Revenue in EUR calculated in this way is then compared to the actual revenue in EUR in the period at hand.

2Source: CECED (European Committee of Homeestic Equipment Manufacturers) 1–12/14



Gorenje Group revenue (in EUR million)



Revenue by geographical segments

EUR million





Change (%)

Western Europe






Eastern Europe






Eastern Europe without Ukraine and Russia






Rest of world






Group Total







Western Europe






Eastern Europe






Eastern Europe without Ukraine and Russia






Rest of world






Home total






Western Europe includes Austria, Germany, Italy, France, Denmark, Sweden, Belgium, Finland, Great, Britain, Greece, Norway, Netherlands, Spain, Switzerland, Ireland, Luxembourg, Malta, and Portugal;

Eastern Europe includes Ukraine, Russia, Macedonia, Croatia, Serbia, Montenegro, Albania, Bosnia and Herzegovina, Belarus, Kosovo, Moldavia, Latvia, Lithuania, Estonia, Slovenia, Czech Republic, Hungary, Poland, Bulgaria, Romania, and Slovakia; Rest of World includes all other countries beyond Europe.


Taking a closer look at the sales structure by geographical segments, we find the following:


  • In Western Europe, sales in terms of value dropped by 2.3% relative to 2013. Revenue was lower in Scandinavia, France, Belgium, Great Britain, and Greece; higher revenue was generated in Germany and Austria. In Eastern Europe, revenue in euro terms was on a par with the 2013 figure. Adjusting for the effect of currency fluctuation, organic revenue growth amounted to 7.2 percent. Sales were higher in the markets of the Czech Republic, Slovakia, Hungary, Bosnia and Herzegovina, Romania, Bulgaria, and Russia; and they were lower in Ukraine, Macedonia, and Poland. Higher growth in other Eastern European markets compensated for the loss of sales in Ukraine.
  • Beyond Europe, our revenue was a notable 10.7 percent higher than in 2013. Adjusting for the effect of currency fluctuation, organic revenue growth amounted to nearly 13.2 percent. Higher sales were generated in North America, Australia where we saw growth of major appliance sales under our own brand, as well as the markets of the Far East.

Revenue by business segments (in EUR million)

Revenue in the business segment Home in 2014 amounted to EUR 1,065.9 million, which is 0.1 percent more than in 2013.


Revenue in the business segment Portfolio Investments amounted to EUR 179.7 million,which is 2.4%, or EUR 4.3 million more than in 2013. Higher revenue in this segment resulted from higher sales of medical equipment and metallurgy products. Higher sales were also seen in machine building, toolmaking, and ecology.


Observing the composition of revenue by business segments, we not that 85.6% of total Group revenue was generated in the segment Home (0.3 percentage point less than in 2013; the change results from higher revenue growth in the Portfolio Investment segment).


Group revenue by business segments (in %)


The following table breaks down the change in Group profitability at the EBIT level:

EUR million


EBIT 2013


Contribution margin at the level of costs of goods and material


Costs of services


Labour costs / Employee benefit expenses


Depreciation and amortization expense


Other operating expenses


Other operating income


EBIT 2014


Operating profit (EBIT): our EBIT was positive at EUR 43.5 million. Relative to 2013, EBIT was higher by EUR 7.2 million, or 19.8%. The improvement in EBIT results from the following:

  • successful management of upstream (procurement) prices of raw and processed materials;
  • successful management of energy costs (also as a result of relocations of manufacturing operations);
  • lower cost of services (cost of services was EUR 11.1 million lower than in the equivalent period of the year before); and
  • lower labour costs. Labour costs were EUR 10.3 million lower than in the equivalent period of the year before.

Development of the contribution margin at the level of costs of goods and material was negatively affected by the changes in business environment in Russia and Ukraine, currency fluctuations, and downward pressure on our downstream prices. These effects were alleviated by selective price hikes and improvement of sales structure of our appliances and regional sales structure. Sales structure was improved by increasing the sales of premium appliances3 which reached a 16.4-percent share in total major appliance sales in terms of volume, which is 2.0 percentage points more than in 2013. Regional sales structure was improved by higher sales beyond Europe where our sales mostly involve upmarket and premium appliances. We also increased the sales of small domestic appliances which yield higher contribution margins (revenue from small domestic appliances account for nearly 4 percent of Home segment sales, which is 0.2 percentage point more than in 2013).


Other operating income in last year was lower due to lower gains from divestment of non-operating assets (real property), received subsidies, received indemnities for the fire at the company Gorenje Surovina in 2013, and lower revenue from value adjustment of investment property.


EBIT and EBIT margin (in EUR million)

Our EBITDA in 2014 amounted to EUR 86.5 million which is EUR 8.3 million or 10.6% more  than in 2013.


3Premium appliances: appliances of the brands Atag, Asko, and Gorenje’s designer lines (Gorenje Simplicity, Gorenje Ora-.to, Gorenje Pininfarina, Gorenje Classico, Gorenje One, Gorenje Karim Rashid, Gorenje Color Edition, Gorenje+, Gorenje Retro).


EBITDA and EBITDA margin (in EUR million)

In 2014, our result from financing operations was negative at EUR -38.7 million. The result from financing operations is EUR 15.7 million better than in 2013. The improvement of our result from financing operations is a result of lower investment write-off than in 2013.


Corporate income tax, reported in the amount of EUR 2.6 million, includes the levied corporate income tax and the deferred tax assets. Levied corporate income tax is the tax payable on the taxable income for the fiscal year by respective Group companies. Deferred tax is recognized with respect to temporary differences between the carrying value of assets and liabilities for financial reporting purposes and the amounts recognized for taxation purposes. The amounts of temporary differences, which are the predominant determinants of the deferred tax, pertain to tax relief for investment and research and development, and tax to losses from previous years, of which most were reported by the parent company.


Gorenje Group profit for the period amounted to EUR 1.2 million. Thus, our profitability was improved by EUR 26.2 million. In 2014, Group profit was negative only in the last quarter when net result was EUR -2.8 million. Net loss in the last quarter was a result of aggravation of general and macroeconomic conditions in Russia and Ukraine.


Profit or loss for the year (in EUR million) and ROS


The fundamental goal of the financing policy, conducted at the Group level by the central finance function, is to provide adequate liquidity at the lowest possible cost (i.e. lowest possible finance expenses), in order to be able to settle the liabilities across the Group, as they are due for payment.


The basic source of liquidity is the sales operations in the business segments Home and Portfolio Investments, and the resulting free cash flow. In this respect, optimization of net working capital is particularly important. Additional sources include proceeds from divestment and new long-term sources of financing obtained to refinance the maturing existing long-term borrowings, and continuous renewal of short-term borrowings, revolving credit facilities, and credit limits on current accounts. Pursuant to the 2014 financial plan, particular attention was paid to refinancing of the maturing current portions of long-term financial liabilities and to renewal of short-term credit facilities. Thus, our long-term borrowings are regularly repaid and partly refinanced, while short-term borrowings are regularly renewed.


In 2014, we repaid a total of EUR 150.3 million of current portions of long-term borrowings. In early October, we issued 5-year bonds in the total nominal amount of EUR 73 million. Due to high investor interest, the volume of the issue exceeded the initially planned amount. The funds thus raised were allocated for further improvement of the maturity profile of our debt and for diversification of our financing sources that were previously restricted almost exclusively to banking sources. Activities and operations in 2014 led to considerable lower needs for replacement borrowing for the financial liabilities maturing in 2015 and for the maintenance of the stable maturity profile.


Total and net financial liabilities in the years 2011–2014, in EUR million4, and changes in the  

maturity profile of financial liabilities

4Accounting aspect


As at December 31, 2014, total financial liabilities amounted to EUR 367.6 million, which is EUR 29.8 million less than as the end of 2013. Changes in financial liabilities are consistent with the annual seasonal dynamics as the Group generates most of its positive cash flow from operating and investing activities in the last quarter of each fiscal year. The dynamics in this regard were more favourable in the last quarter of 2014 than in the equivalent period of the year before.


In the maturity profile of our financial liabilities, long-term financing sources account for 73.5%; the rest are short-term sources. Relative to December 31, 2014, the maturity profile was improved by 23.5 percentage points as a part of our short-term borrowings were replaced with long-term debt.


Net financial liabilities (measured as the difference between total financial liabilities, and cash and cash equivalents) at the end of 2014 amounted to EUR 331.8 million, which was EUR 27.1 lower than at the end of 2013. As at December 31, 2014, the Group’s liquidity reserve amounted to EUR 109.5 million and it included approved yet unused short-term credit facilities and cash in bank accounts, which can also be used to bridge any payments of the maturing liabilities. We are working with the existing and some new banking partners to repay or refinance our maturing liabilities and, and to optimize our finance expenses, further improve our maturity profile, and regulate the amount of our liquidity reserve. These activities have already provided a considerable share of funding for servicing our currently maturing portions of long-term debt for the entire year 2015, and for current cash flow requirements.


Cash flows: in the 2014 fiscal year, our free cash flow from operating and investing activities was positive at EUR 29.4 million, which is EUR 42.7 million more than in 2013. This is mostly a result of the improvement in net profit for the year, and further optimization of net current assets.


Cash flow from operating and investing activities (in EUR million)



Investment in 2014 amounted to EUR 61.6 million, which is EUR 15 million less than in 2013. The largest share of investment was made in the core segment Home where investment totalled at EUR 24.8 million. Approximately EUR 15 million was allocated for new product development (new generation washing machines, completion of the new generation of built-in ovens, revision of the 600-mm free-standing cookers, and facelift to the existing generation of dishwashers). The next major investment area was technological equipment (replacement of equipment, automation, investment maintenance). A good share of investment (around EUR 3 million) was intended for support to sales activities (opening of new retail units, exhibition areas etc.). Investments in the business segment Portfolio Investments in 2014 amounted to EUR 7.8 million, most of which was allocated to the fields of ecology, toolmaking, and ceramic tile production (the company Gorenje Keramika is completing the project of revision of the tile formats, while other Portfolio Investments companies have launched their sales promotion projects).


Investment by business segments (in EUR million)

In 2014, proceeds from divestments amounted to EUR 8.5 million, which is EUR 10.4 million less than in 2013.


As at December 31, 2014, the Group’s investments into net working capital stood at EUR 177.5 million. Relative to the end of 2013, investment into net working capital was lower by EUR 31.1 million. The amount of net working capital investment was partly affected by the change in other current liabilities and assets. The narrowly defined net current assets (inventory, trade receivables, and trade payables) decreased by EUR 30.2 million relative to the equivalent period of the preceding year.


Trade receivables as at the end of 2014 were at EUR 180.4 million. Relative to 2013, the figure was lower by EUR 25.2 million. Average days sales outstanding were at 56, which is 6 days less than the average days sales outstanding in 2013. Decrease in receivables is a reflection of normal annual dynamics, as well as sound management of credit risk.


Investment at the end of 2014 amounted to EUR 219.4 million. Compared to 2013, it is lower by EUR 16.4 million. Days in inventory were cut from 70 to 66 days. Several efficient inventory management projects took place in 2014 to decrease the inventory required for our sales activities in the long run. In this respect, particular attention was paid to the optimization and decrease of:

  • slow inventories of finished products and merchandise (these inventories were cut by 25% relative to the end of 2013);
  • inventories of discontinued IDs at warehouses of manufacturing and trade companies of the Home segment;
  • complexity of the number of codes/IDs of finished products and merchandise.

We were also successful in cutting the inventories of raw and processed materials. In this regard, particular attention is paid to cutting the slow inventories of raw and processed materials, and semi-products, and to reduction of complexity.


Trade payables at the end of 2014 amounted to EUR 202.5 million, which was EUR 11.3 million less than at the end of 2013. The figure is consistent with the normal annual dynamics.


The business environment remains challenging for home appliance industry in 2015, with Russia being the prime source of uncertainty in this respect. Therefore, we have developed several scenarios for our business plan.


In Russia, we are expecting a decrease in revenue this year, for the first time after a decade of growth. The effect of this market is the predominant reason for planning total revenue that is 2.4 percent lower than the Group revenue in 2014. We have introduced a variety of measures to minimize the effects of harsher macroeconomic conditions expected especially in the first half of the year. Pricing policy is being adjusted, costs of raw and processed material, services, logistics, and labour are being optimized, and product assortment is being expanded with a new generation of built-in cooking appliances which carry most of Gorenje’s recognition and instinctiveness also in Russia. As in 2014, we have hedged most of our 2015 rouble cash flow.


This year, we are planning further improvement in the structure of sales, both regionally and in terms of products. Sales in markets beyond Europe is planned to increase by 2.2% relative to 2014, fuelled especially by sales in the Middle and Far East and in Australia. We are also planning an increase in sales of premium and upmarket appliances from 16.4% in 2014 to 17.2% of total sales by volume in 2015.


Moreover, we continue to improve our financial position in this year. We are looking to cut our net debt by further EUR 10.6 million. This will be attained by better management of working capital and complexity of finished products and merchandise. Moreover, proceeds from divestment of non-operating assets will also be used for deleveraging. With the EBITDA planned at EUR 92.9 million, the net financial debt to EBITDA ratio will decrease to 3.5 in 2015.

  • revenue of EUR 1,216.1 million
  • EBITDA at EUR 92.9 million
  • EBIT at EUR 43.1 million
  • net profit at EUR 6.1 million
  • net financial debt to EBITDA ratio at 3.5



  • On February 20, Gorenje, d.d., issued 10-month commercial paper bearing an interest rate of 2.20% p.a., with the total value of EUR 27 million, or 35% more than initially planned.Sizeable interest in commercial paper is proof of investor confidence in the Gorenje Group. With the last year’s issue of 5-year bonds and issue of 10-month commercial paper, combined, we raised EUR 100 million in capital markets in no more than four months. Thus, over a quarter of our financing is sourced through capital markets, which has resulted in better stability and financing terms. Commercial paper will also be offered in the second subscription round from March 2, 2015, to December 1, 2015, up to a final total issue amount of EUR 30 million nominally.
  • We have started negotiations with the Polish company Elemental Holding SA on the divestment of the majority shareholding in our subsidiary Gorenje Surovina, d.o.o. Negotiations also involve some other subsidiaries of Gorenje Surovina. The purpose of the negotiations is to specify the scope, value, and terms of sale. Management Boards of Gorenje, d.d., and Elemental Holding SA expect to complete the negotiations by the end of the second quarter of 2015. Elemental Holding SA is a leading Polish company active in the fields of scrap metal collection and recycling. Through its subsidiaries in Poland, Slovakia, Lithuania and Turkey it is a key player in non-ferrous metals, electronic scrap and catalytic converters. It is listed on Warsaw Stock Exchange and has current market capitalisation of over 150 million euro.
  • There were no other major events after the reporting date for the statement of financial position, i.e. December 31, 2014.