ANNUAL REPORT 2008 - Gorenje Group
ANNUAL REPORT 2008 - Gorenje Group ANNUAL REPORT 2008 - Gorenje Group
4 2008 LETTER OF THE PRESIDENT OF THE MANAGEMENT BOARD Franjo Bobinac, MBA President of the Management Board Dear shareholders, The year 2008 significantly marked the history of Gorenje. Although the Company's current business operations are decisively influenced by a decline in orders, which began in the last quarter of 2008, the most important event of 2008 from the long-term perspective occurred in summer, i.e. in mid June, when Gorenje acquired Atag, a Dutch provider of household appliances. With the integration of Atag into the Gorenje Group, we have covered the last grey spot in Europe and entered the markets of Benelux and its population of more than 27 million, where the Company had only been minimally present before the acquisition. At the same time, we have rounded the set of brand names with a brand from the highest price grade, which will enable us to substantially solidify the position of the Gorenje Group in Europe. Gorenje is thus implementing its strategic plan and its role of active consolidator in the household appliances sector. The integration of the Atag company and the growth of the Ecology, Energy and Services Division have, in spite of the reduced volume of operations in the Home Interior Division, significantly contributed to the fact that the Gorenje Group has, despite the turbulences, increased its scope of business activities and that its consolidated sales revenues in the amount of EUR 1.33 billion have even surpassed the plan. Following a period of very satisfactory results in the first nine months of 2008, the situation suddenly began to deteriorate in the wake of the emerging financial and economic crisis. The recession spread rapidly to practically all key markets, inevitably leading to a substantial decline in the demand for Gorenje products, which are classified among durable goods. This blow was particularly strong in some Eastern European countries, especially those with soft currencies and solvency problems, where we were additionally affected by considerable exchange rate fluctuations. Gorenje reacted to the crisis quickly and resolutely, and with sensitivity for the interests of all participants, which is a longstanding tradition of the Company.
5 A review of the operations of manufacturers of large household appliances shows that only a few managed to successfully confront the strained operating conditions at the end of 2008, which affected the entire sector and were reflected primarily in the reduced demand for products. All companies responded by reducing operating costs and, due to the intensity of work that is characteristic of this sector, focused on staff reductions. At Gorenje, however, we had previously devoted close attention to the costs of materials and raw materials by means of favourable forward purchases of raw materials and further accelerated development of supply sources in Asia, in other dollar-based supply markets, and in the countries of South-eastern Europe. We then focused on the costs of logistics, various services, and administrative costs. In third place were employee benefits, where we have introduced temporarily shortened working hours and improved organization with the aim of achieving higher productivity and adaptability which, within the scope of the social agreement, enables better adaptation to the level of orders. In past years, Gorenje invested extensively in development, and for this reason our investment policy in 2009 is extremely selective and oriented exclusively towards the development of new products and sales activities, i.e. only towards those investments that are crucial to the further development of the Company. In the past year, the most distinguished ambassadors of the Gorenje brand name came from the cooking appliance line, where we created a new generation of cookers, builtin ovens and cooking hobs. This was both a challenge and an opportunity for Gorenje. We take special pride in the fact that numerous innovative, conceptual and original design and functional solutions that are unique in their respective sectors – and thus also patent-protected – have been created in their entirety by Gorenje's development and design teams. One of our key activities aimed at ensuring the success of our anti-crisis measures is the upgrading of pro-active and open communications with employees, buyers, suppliers, owners, the media, and all other participants in connection with the deteriorating conditions for the sale of household appliances, as well as the activities and guidelines implemented by the management of Gorenje for their alleviation. The Company is attempting to neutralise the negative effects of the crisis in all areas of its operations. The results for 2008 indicate that we are doing better than many of our competitors, which is why we are determined to emerge from this crisis even stronger and more flexible than before. Despite the current difficulties, I believe in Gorenje's long-term strategy, which places products with higher value in the forefront, and that our market position will strengthen after the end of the crisis, as this demanding situation will bring about a considerable shuffling of players in the household appliances branch. There is no doubt, however, that 2009 will be a very difficult year for Gorenje as a manufacturer of household appliances, and will be focused on the creation of positive monetary flows, restructuring and, at the same time, preserving as many jobs as possible. Dear shareholders, despite the crisis shock in the last few months of the calendar year, we have reason to be satisfied with the 2008 results. In fulfilling our mission, you are supporting us with your trust, for which I sincerely thank you on behalf of the Management Board and my co-workers. My special thanks goes to the members of the Supervisory Board of Gorenje, d.d. for their professional cooperation, with which they have and will continue to contribute to the successful development of the Company. In future we shall continue to foster openness through the proactive and extensive informing of all shareholders on our activities, to which we are committed not only by the distinguished awards received for communication, but also by the values we pursue in fulfilling our mission towards our owners, employees, business partners, and the broader environment.
- Page 1 and 2: ANNUAL REPORT 2008
- Page 3: LETTER OF THE PRESIDENT OF THE MANA
- Page 8 and 9: 8 2008 KEY ACHIEVEMENTS OF THE GORE
- Page 10 and 11: FINANCIAL HIGHLIGHTS OF THE GORENJE
- Page 12 and 13: 12 2008 EVENTS IN 2008 BUSINESS ACT
- Page 14 and 15: 14 2008 REPORT OF THE SUPERVISORY B
- Page 16 and 17: 16 2008 The Annual Report of Gorenj
- Page 19 and 20: CORPORATE GOVERNANCE
- Page 21 and 22: 21 • On 16 January 2008, Gorenje,
- Page 23 and 24: 23 Gorenje Budapest Kft., Hungary 1
- Page 25 and 26: 25 members of the Management Board,
- Page 27 and 28: 27 d. On the Company’s rules on t
- Page 29 and 30: 29 of the Management and Supervisor
- Page 31: 31 1.3 STATEMENT OF MANAGEMENT RESP
- Page 34 and 35: 34 2008 Owing to the intensively ch
- Page 37 and 38: BUSINESS REPORT
- Page 39 and 40: 39 SLOVENIA • Considerable slowdo
- Page 41 and 42: 41 3.2.1 HOME APPLIANCES DIVISION 3
- Page 43 and 44: 43 AUSTRIA SCANDINAVIA • Rapid gr
- Page 45 and 46: 45 BUSINESS OPERATION OF ATAG EUROP
- Page 47 and 48: 47 ENERGY • Sales revenue doubled
- Page 49 and 50: 49 3.4 PURCHASING Raw material mark
- Page 51 and 52: 51 included a connection to the nat
- Page 53 and 54: 53 The appliances have been classif
4<br />
<strong>2008</strong><br />
LETTER OF THE PRESIDENT<br />
OF THE MANAGEMENT BOARD<br />
Franjo Bobinac, MBA<br />
President of the<br />
Management Board<br />
Dear shareholders, The year <strong>2008</strong> significantly marked the history of <strong>Gorenje</strong>. Although the Company's<br />
current business operations are decisively influenced by a decline in orders, which began<br />
in the last quarter of <strong>2008</strong>, the most important event of <strong>2008</strong> from the long-term perspective occurred<br />
in summer, i.e. in mid June, when <strong>Gorenje</strong> acquired Atag, a Dutch provider of household appliances.<br />
With the integration of Atag into the <strong>Gorenje</strong> <strong>Group</strong>, we have covered the last grey spot in Europe<br />
and entered the markets of Benelux and its population of more than 27 million, where the Company<br />
had only been minimally present before the acquisition. At the same time, we have rounded the<br />
set of brand names with a brand from the highest price grade, which will enable us to substantially<br />
solidify the position of the <strong>Gorenje</strong> <strong>Group</strong> in Europe. <strong>Gorenje</strong> is thus implementing its strategic plan<br />
and its role of active consolidator in the household appliances sector.<br />
The integration of the Atag company and the growth of the Ecology, Energy and Services Division<br />
have, in spite of the reduced volume of operations in the Home Interior Division, significantly contributed<br />
to the fact that the <strong>Gorenje</strong> <strong>Group</strong> has, despite the turbulences, increased its scope of business<br />
activities and that its consolidated sales revenues in the amount of EUR 1.33 billion have even<br />
surpassed the plan.<br />
Following a period of very satisfactory results in the first nine months of <strong>2008</strong>, the situation suddenly<br />
began to deteriorate in the wake of the emerging financial and economic crisis. The recession<br />
spread rapidly to practically all key markets, inevitably leading to a substantial decline in the<br />
demand for <strong>Gorenje</strong> products, which are classified among durable goods. This blow was particularly<br />
strong in some Eastern European countries, especially those with soft currencies and solvency<br />
problems, where we were additionally affected by considerable exchange rate fluctuations. <strong>Gorenje</strong><br />
reacted to the crisis quickly and resolutely, and with sensitivity for the interests of all participants,<br />
which is a longstanding tradition of the Company.
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