ANNUAL REPORT 2008 - Gorenje Group

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In the first two months of 2009, the Group faced a 20 to 25-percent drop in the operations, the
downward trend remaining similar to the one in the last few months of 2008. The majority of the
manufacturers operating in the business segment recorded a loss in the last Quarterly of 2008.
Therefore numerous activities were launched in December 2008 whose purpose is to neutralize the
negative impact of the extremely low sales. They are directed to all areas of the Group’s operations
and all business processes, relating to:
• the cost management of raw materials (inventory optimisation, favourable term
purchase of raw materials, further development of supply sources from Asia in
other dollar-based supply markets and South-Eastern European countries, further
cost-cutting measures to be adopted in association with the cost of materials),
• production process (flexibility in the adaptation of the production to the level
of orders),
• purchase of goods (adjustment of purchases to the current requirements),
• sales (sales promotion, intensifying of customer contacts, search for new business
opportunities, simplification),
• costs of logistics (maximizing the utilization of transportation means),
• investments (approval of solely the most urgent investments whose purpose is
new product development),
• marketing area (cost-cutting in all markets, limiting the costs to costs that are directly
linked to sales promotion),
• costs of services (decrease in the management and general administration
costs, adaptation of costs to the range of sales, strengthening the control over
the cost base),
• assurance of positive cash flows (raising new long-term loans, receivables optimisation,
assuring short-term liquidity),
• a decrease in current assets (management of inventories and receivables) and
• labour cost optimisation (implementation of a 36-hour weekly working time, a
10-percent salary decrease, organisational restructuring and restructuring of
business processes).