Annual Report Gorenje Group 2009

Letter of the President of the Management Board
Dear shareholders,
The year 2009, marked by a global financial and economic crisis, was an extremely challenging year
for the Gorenje Group. The trend of declining orders that began in the last quarter of 2008 continued
into 2009. The Western European household appliance market registered a nine-percent decline, while
in Eastern Europe, an extremely important market for the Gorenje Group owing to its high profitability,
the two-digit market growth recorded in previous years turned into a thirty-percent decline. At the same
time, a significant shift occurred in the demand structure, with consumers showing a preference for
lower priced appliances in a time of precarious economic conditions. Increased payment indiscipline,
fluctuating values of non-euro currencies, and rising prices of raw materials and materials further
aggravated the business operations of the Gorenje Group and other European manufacturers of
household appliances.
The changed economic environment forced us to adapt quickly and effectively to the new operating
circumstances. We intensified the implementation of measures aimed at optimising business
processes and stocks, reducing costs of materials, services and labour, and accelerating sales. To
neutralise the negative effects of the global crisis, we focused our activities on the attainment of three
goals: ensuring free cash flow, strengthening market shares, and preserving productive jobs.
Last year, the household appliances market split into two parts - expensive and less expensive
appliances. The Gorenje Group responded to these changes by covering various segments and all
price grades of appliances, and by offering new product lines. One of these is the line of technologically
advanced, yet reasonably priced Gorenje Simplicity appliances offering easy operation combined with
trendy design. For more demanding customers we have created, in cooperation with the renowned
New York designer, Karim Rashid, a collection of exclusive appliances labelled »Gorenje designed by
Karim Rashid«.
Strategic policies that were observed in previous years: the strengthening of the Gorenje brand by
introducing designer lines and niche appliances, the internationalisation of production (takeover of the
Czech producer of cooking appliances Mora Moravia, building a new factory for fridge and freezing
appliances in Valjevo and introducing a programme of water heaters in Stara Pazova in Serbia), as
well as the takeover of the Dutch company Atag proved as correct also in 2009 as they significantly
contributed to the implementation of goals in this difficult year.
The home appliances branch has its place among mature markets with a relatively low growth. That is
why innovativeness, difference, and a reputable trademark are of key importance for our Group. By
developing new, technologically perfected and design-led products with innovative functions, we have
managed to strengthen our brand name in a crisis year, as confirmed by the independent Eurobrand
Institute in Vienna, which assessed that our brand value increased to EUR 458 million in 2009.
By the introduction of novelties and a flexible response to customers' orders, we have justified our
reputation as a reliable business partner, retained our existing customers and acquired new ones. In
doing so we have preserved or increased our shares in the majority of markets.
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Annual Report Gorenje Group 2009