presentation of the gorenje group business performance 9m...

Presentation

of the Gorenje

Group Business

Performance 9M 2017Investor ConferenceAustria Trend Hotel,

Thursday, the 23rd of November, 2017

2

CONTENTS:

1. HIGHLIGHTS

2. BUSINESS REPORT

2.1. GROUP PERFORMANCE

2.2. PERFORMANCE OUTLOOK

3. FINANCIAL REPORT

3.1. FINANCIAL MANAGEMENT

3.2. GROUP FINANCIAL STATEMENTS

4. EXECUTIVE SUMMARY AND KEY MANAGERIAL ACTIVITIES

3

I. HIGHLIGHTS

9M 2017 HIGHLIGHTS

Gorenje Group sales revenue: EUR 943.9m

4.8% more than in 9M 2016

Revenue from Domestic appliances sales: EUR 779.8m


3.3% lag behind the planned dynamics for 9M 2017

Stable market share also in 9M 2017 (2.6% in value and 3.0% in units)

Price index increased in 9M2017 (+1.0 p.p.) reached 89 in 28 EU Countries)

Premium products accounted for 28.7% in 9M 2017 (+1.5 p.p.)

Innovative products accounted for 20.9% in 9M 2017 (+1.9 p.p.)

Sales revenue in Other businesses: EUR 164.1m


We generated net profit of EUR 4.6m.

EUR 0.2m more than in 9M 2016 (+12.1%)

I. HIGHLIGHTS

4

5

II. BUSINESS REPORT

IN 9M 2017

6


KEY BUSINESS ACTIVITIES

Focus to sales growth supported by:

launch of several new generations (freestanding cookers, premium washing

machines and driers, premium dishwashers, cooker hobs) and new or

refreshed product lines (Bulli refrigerators, dishwashers for OEM customers

and Ora Ito2 line),

new build-in cooling appliances and connected appliances are in a final

development phase. Connected appliances under ATAG brand will be

available already until the end of 2017,

selective investments into marketing (digital marketing, marketing

campaigns and fairs…) and R&D (connected appliances, activities for in-house

development of electronics…).

Start of serial production and sale of new generation of free standing

cookers, premium washing machine and dryers, cooker hobs and premium

dishwashers. New generation of connected appliances will be launched until

year end under premium brand ATAG.

Cost management activities, neutralizing the negative effects in the raw and

processed material markets (Q2) and labour cost pressures (signed

agreements with social partners in Slovenia and Serbia);

We have secured the required refinancing for our financial liabilities due in

2017, and cut interest costs by 15.5%.6

REVENUES BY QUARTERS


7

4.8% increase in comparison to 9M 2016.

Growth mainly in the markets outside Europe and in Eastern Europe.

Growth with premium brands ASKO and ATAG.

Disproportional growth of sales revenues in Other Businesses (+26.0% more

than in 9M 2016).7

Period Q3

PYRP ACTP PYRQ ACTQ

900.9 943.9 319.6 320.0

4.8% 0.1%


8

REVENUE STRUCTURE BY BUSINESS

Budgeted share of DA for 9M 2017 was 85.5%, and the achieved

share was actually lower due to disproportional growth of sales

revenues in Other Businesses.

8


9

DOMESTIC APPLIANCES REVENUES BY QUARTERS

9

1.2% increase in comparison to 9M 2016

Growth mainly in the markets outside Europe, Eastern Europe and

Benelux and with premium brands ASKO and ATAG

Q1 Q2 Q3 Q4

PYRP ACTP PYRP ACTP PYRP ACTP PYRP ACTP

240 247 252 261 279 272 306

3.0% 3.3% -2.3%


10

DOMESTIC APPLIANCES REVENUE STRUCTURE

BY BRANDS

Growth of share of premium brands ASKO (1.1 p.p.) and ATAG (0.4 p.p.).

Share of Others dropped for 1.1 p.p. due to Panasonic.

10


11

Favourable product structure of DA sales with growing sales in dishwashers

(+17.9%), cooking appliances (+0.1%) and SDA (+18.3%).

Growth of the share of dishwashing programme (1.8

p.p.) and small domestic appliance programme (0.6 p.p.).

DOMESTIC APPLIANCES REVENUE STRUCTURE

BY PROGRAMS

11

12

DOMESTIC APPLIANCES REVENUE FROM PREMIUM

PRODUCTS

Share of premium products in revenue in 9M 2017 was 28.7%

compared to 27.2% in 9M 2016.

Premium appliances: Asko and Atag branded products, appliances

from the Gorenje design lines.


12

13

DOMESTIC APPLIANCES REVENUE FROM INNOVATIVE

PRODUCTS

Share of Innovative products in revenue in 9M 2017 was 20.9%

compared to 19.0% in 9M 2016%.

Innovative appliances: appliances within individual group of products with

the so-called »innovative functionalities« are more energy efficient (efficient

storage, lower energy and water consumption) based on the Gfk

methodology.


13

COMPARABLE ADDED VALUE


14

Value added was by 4.7% higher then the comparable value added in 9M

2016.

Comparability adjustment in 9M 2016 data relates to transfer of trade

receivables impairment from financial to operating part of P&L (EUR 4.7m).14

Period Q3

PYRP ACTP PYRQ ACTQ

231.7 242.5 80.4 81.0

4.7% 0.7%

COMPARABLE EBITDA


15

EBITDA was by 5.2% higher then comparable EBITDA in 2016.

Comparability adjustment in 9M 2016 data relates to transfer of trade

receivables impairment from financial to operating part of P&L (EUR 4.7m)

15

Period Q3

PYRP ACTP PYRQ ACTQ

55.9 58.8 19.7 18.2

5.2% -7.4%

COMPARABLE EBIT


16

EBIT was for 12.1% lower then comparable EBIT in 2016

This pertains to the effect of growing depreciation cost (EUR 5.4m more depreciation

than in 9M 2016) as a result of accelerated investment cycle and capitalisation of

development costs (EUR 1.6m more amortization than in 9M 2016).

Comparability adjustment in 9M 2016 data relates to transfer of trade receivables

impairment from financial to operating part of P&L (EUR 4.7m)16

Period Q3

PYRP ACTP PYRQ ACTQ

20.5 18.0 7.8 3.5

-12.1% -55.4%

NET PROFIT


17

12.1% increase of net profit compared to 9M 2016.

Net financial result EUR 1.6m better than 9M 2016 mainly due to lower interest

expenses

Income tax expenses EUR 1.9m lower than 9M 2016 as a result of a favourable

and final decision in a tax audit.17

Period Q3

PYRP ACTP PYRQ ACTQ

4.1 4.6 2.1 0.2

12.1% -89.3%

18

KEY PERFORMANCE FACTORS IN Q4 2017

Consistently with the dynamics of the 2017 business plan, we expect

the highest revenue from DA in Q4 2017, it is estimated, that

revenues in Q4 will reach approximately 30% of the yearly budget .

Additional revenue and improved sales structure should result in

improved integral net margin.

Effective manufacturing cost management, considering the higher

production volume planned for the last quarter of the year.

Higher marketing investments supporting the sales growth in Q4, yet

adjusted due to the pressure from the raw and processed material

markets and labour costs.

Adjustment of the production volume and supplementary program

purchases to the required decrease in finished product and

merchandise inventories.

Effective cost management measures, including measures in the

segment of white collar employees, to partly neutralize the effects of

labour cost increase due to agreements reached with social partners.


18

19

KEY RISKS

Ensuring the planned sales volume, in particular on the very

competitive Western European markets,

Accomplishing the planned profitable sales growth due to further

concentration of distribution channels on key markets.

Efficient serial production of new generations of key product

groups.

Delivering cost efficiency, especially on account of:

Growing costs of key raw materials and components; and

Pressures on labour costs in Slovenia, Serbia, and the Czech

Republic (signed agreements with social partners in Slovenia and

Serbia).

Improvement of working capital management to support our

deleveraging efforts until the end of the fiscal year.


19

20

KEY MEASURES FOR RISK MITIGATION IN Q4 2017

Increase of sales in last quarter with strongest sales, good product and

geographical structure and positioning of our brands. Supported with strong,

target-oriented marketing activities.

Increase of productivity and cost efficiency of processes aimed at

minimizing the negative impacts on labour costs.

Improvement of working capital turnover through supply chain factoring,

thereby decreasing of the Group‘s indebtedness

Inventory management through supply chain management, decreased

complexity and appropriate co-ordination of production

Focus on DA as the Group‘s core activity with review of possibilities for

divestment of Other Business and non-operating assets.

With respect to the worsened performance of the Gorenje Group in the third

quarter and the described challenges or negative factors that are expected

also in the last quarter of 2017, we will, based on the stated activities attend to

achieve, to the maximum extent possible, the key planned objectives for 2017

which, however, will not be completely fulfilled. The Budget for the year 2018

together with the estimated financial results for 2017 will be published after the

Supervisory Board meeting on 11th of January, 2018.


20

21

III. FINANCIAL REPORT

22


We have secured the required refinancing for our loans due in

2017, and cut interest payment by 15.5% (EUR 1.8m EUR).

We have prepared and are leading a range of measures and

activities to ensure decrease in Gorenje Group debt till the end of

the year.

We have accelerated activities with our suppliers with the aim to

prolong payment terms with the support of supply chain financing

(SCF) program (reverse factoring). More then 60 suppliers have joint

the SCF program already and we are adding new suppliers to the

program on a daily basis.

We issued a tender for the renewal of the Gorenje Group insurance

programs, negotiations and completion of the process is expected in

November 2017. Further to traditional insurances, we are planning to

conclude also Cyber and Crime insurance policies in order to be

covered also against growing cybernetic threats.


22

23


We have aligned risk management organisation to the new

organisational structure of Gorenje Group.

Currency risk management and Credit risk management policies

were renewed.

We are preparing measures to avoid negative impact regarding new

International financial reporting standards (IFRS) which will be

effective from 2018 and 2019.

We have renewed monthly production planning in order to improve

the accuracy of dynamic budgets.

We are further improving and aligning the internal reporting system with

the new organisational structure of Gorenje Group.

We agreed the activities with external auditors to accelerate

auditing process for business year 2017.


23

24

FINANCE INCOME AND EXPENSES


Average weighted interest rate for utilized financial liabilities as at September 30, 2017, was

2.53% (3.05% as at September 30, 2016).

Net revaluation adjustments in 9M 2017 worsened compared to the same period in 2016,

due to very favourable currency translation differences in H1 2016.Positive effect of RUB in 9M

2016 in amount of EUR 1m, while EUR 0.25m in 9M 2017.

Other finance income/expenses in 2016 included revaluation adjustments in the amount of

EUR 4.7m, presented data are prepared on the comparable level.24

EUR thousandComparable

9M 20169M 2017 %

Interest income 449 71 520 15.8%

Revaluation adjustment income 1,879 -23 1,856 -1.2%

Other finance income 954 148 1,102 15.5%

Total finance income 3,282 196 3,478 6.0%

Interest and similar expense 11,351 -1,757 9,594 -15.5%

Revaluation adjustment expense 860 1,347 2,207 156.6%

Other finance expenses 3,607 -983 2,624 -27.3%

Total finance expenses 15,818 -1,393 14,425 -8.8%

Net interest -10,902 1,828 -9,074 -16.8%

Net revaluation adjustment 1,019 -1,370 -351 /

Net other finance income/expenses -2,653 1,131 -1,522 -42.6%

Financing activities balance -12,536 -805 -10,947 -12.7%

NET WORKING CAPITAL MANAGEMENT


282.4248.4 227.7 221.7 227.4

22.3%19.7% 18.8% 17.7% 17.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0.0

50.0

100.0

150.0

200.0

250.0

300.0

30.9.2013 30.9.2014 30.9.2015 30.9.2016 30.9.2017

Net current assets (EURm) Share of Net current assets in revenue (%)25

Movement of net working capital in the 2013-2017 period (EURm)

25

EURm 30 Sep2013

30 Sep2014

30 Sep2015

30 Sep2016

31 Dec2016

30 Sep2017

9M 2017 –

9M 2016

+ Inventories 250.8 249.8 249.7 249.3 225.9 258.5 9.2

+ Trade receivables 240.3 228.0 220.5 212.3 165.8 221.5 9.2

+ Other current assets 64.3 48.9 50.0 57.1 58.8 58.8 1.7

- Trade payables -178.1 -182.8 -191.2 -191.2 -223.7 -201.1 -9.9

- Other current liabilities -94.9 -95.5 -101.3 -105.8 -81.9 -110.3 -4.5

= Net working capital 282.4 248.4 227.7 221.7 144.9 227.4 5.7

26

INVESTMENTS

EUR 46.5m of investments in

9M 2017 in comparison to

EUR 52.0m 9M 2016.

90.0% pertains to DA.

26

EURm 9M 2017

Investments in new products 15.1

R&D investments 13.4

Improvement of competitiveness 11.0

Investment into network sales

activities2.4

Investment in Other business 4.6

TOTAL INVESTMENT 46.5

PYRP ACTP-PYRP ACTP ACTP-BUDF BUDF

EURk abs % %

GORENJE GROUP 52.048 -5.579 -10,7 46.469 +57,8 80.402

DOMESTIC APPLIANCES 46.723 -4.872 -10,4 41.851 +58,0 72.121

OTHER BUSINESS 5.325 -707 -13,3 4.618 +55,8 8.281

26


27

FINANCIAL LIABILITIES

Total and net financial liabilities in the years 2013–2017, in EUR million; net

financial liabilities (debt) to EBITDA ratio – is comparable for the year 2017 and

2016; and changes in the maturity profile of financial liabilities

As at September 30, 2017, net financial liabilities amounted to EUR 417.1m, which is

2.9% higher than at the end of 9M 2016, mainly due to higher net working capital

employed.

In 9M 2017 the net financial liabilities to EBITDA ratio was at 5.0 or 0.2 worse

comparing to 9M 2016.

We have improved the maturity profile of our financial liabilities by 6.1 p.p. Long-

term liabilities now account for 70.4%.


27

46.1%

59.2% 63.9% 64.3%70.4%

53.9%

40.8% 36.1% 35.7%29.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

30.9.2013 30.9.2014 30.9.2015 30.9.2016 30.9.2017

Non-current financial liabilities Current financial liabilities

475.2410.4 424.5 426.7 441.1

447.2

387.6 401.4 405.1 417.1

4.64.2

5.5

4.85.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

500.0

30.9.2013 30.9.2014 30.9.2015 30.9.2016 30.9.2017

Total financial liabilities Net financial libilities

Net financial liabilities/EBITDA

28

In 9M 2017, we repaid EUR 51.9m of the current/maturing portion of long-term

borrowings. In Q4 2017, further EUR 43.4m of maturing borrowings are due for

repayment.

With refinancing activities in Q3 2017 we have decreased the level of maturing

long term borrowings for 2018 for EUR 12.5m by changing the amortisation loan

into a borrowing with one-off payment in 2020.


28

MATURING PROFILE OF THE LONG TERM BORROWINGS

YearQ4

20172018 2019 2020 2021 2022 2023

LT repayments per years 43.4 69.4 101.4 69.0 43.2 44.9 6.9

12%

18%

27%

18%

11%

12%2%

Maturity of long term borrowings per year

2017 2018 2018 2020 2021 2022 2023

29

Structure of debtors refers to utilized borrowings at the end of the period

Sound structure of debtors with a growth share of borrowings on capital

markets and with development banks (SID, EIB, Eko sklad) and lower share

of banks with Russian origin.


29

DEBTORS STRUCTURE

20.5%

19.4%

34.4%

25.6%

Debtors structure as at 30 Sept 2016

Capital markets Development banks

Other commercial banks Russian banks

27.9%

20.5%32.3%

19.3%

Debtors structure as at 30 Sept 2017

Capital markets Development banks

Other commercial banks Russian banks

STRUCTURE OF GORENJE GROUP NET FINANCIAL LIABILITIES

30

• Volatility of Net financial liabilities and NFL/EBITDA ratio is highly correlated to the

Net working capital (NWC) seasonal development:

• as of 30.9.2017 54.5% of NFL was related to NWC financing (EUR 227.4m),

while

• at year-end NFL, when the majority NWC is released, NWC financing represented

approx. 42% (EUR 144.9m et the end of 2016 ).

• NFL for Long term purposes/ EBITDA ratio is relatively stable in the observed period

(2.3 as of 30 September 2017)


30

9.1

31

2.9

31

0.4

23

5.7 3

07

.0

28

0.0

28

2.4

20

7.5

24

4.8

25

4.3

24

8.4

17

5.1 2

27

.4

23

3.9

22

7.7

14

2.3 21

1.8

23

3.2

22

1.7

14

4.9 21

5.2

22

5.2

22

7.4

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

500.0

Q112

Q212

Q312

Q412

Q113

Q213

Q313

Q413

Q114

Q214

Q314

Q414

Q115

Q215

Q315

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

NFL for LT purposes NFL for NWC financing NFL/EBITDA (total) NFL for LT purposes / EBITDA

31

KEY ACTIVITIES FOR SUSTAINABLE DELEVERAGING

1. Decreasing inventories to the budgeted level by aligning

production with planned sales in year 2017 and 2018.

2. Trade payables policy and systematic use of supply chain

financing with the aim to prolong payment terms with suppliers.

3. Capex aligned with depreciation in year 2018 and in following years

4. Additional divestment of non-core assets and businesses/activities

possibilities evaluation is in process, potential effects expected in

2018.

5. Review of economics for under-performing businesses and

proposals for measures are in evaluation process, potential effects

expected in 2018.

6. Adjusting the group lease policy to new accounting standards in

order to prevent negative impacts on Group‘s financial covenants:

31


32

CURRENCY RISK MANAGEMENT AND EXPOSURE


32

We renewed FX risk management policy: the main goal is still to protect budgeted

profitability and main economic goals of the Group.

Different types of FX policy and hedging techniques depends on:

1. Characteristics of individual markets and related prices adjustments ability due to FX

parity change,

2. Local currency parity determination against EUR,

3. Local currency convertibility and efficient FX hedging instruments availability.

item

Estimated NET

P&L FX

Exposure in EUR

rolling 12M

P&L Net

Exposure

Estimated BS

FX exposure in

EURBS Net Exposure

RUB 103,0 Sales 4,0 Assets

USD -68,3 Procurement 5,1 Assets

HRK 32,6 Sales 12,4 Assets

AUD 24,7 Sales 5,9 Assets

HUF 23,2 Sales 2,3 Assets

PLN 19,0 Sales 6,3 Assets

33

INTEREST RATE RISK MANAGEMENT AND EXPOSURE


EURm TOTAL

Borrowings

Borrowings

with variable I.R.

Borrowings

with FIX I.R.

TOTAL

FIX

% OF

FIXED

Utilized borrowings: Floating Fixed with

IRS

Sep 30,2017 440.0 95.8 168.1 176.1 344.2 78.2%

June 30, 2017 443.2 111.2 161.6 170.4 332.0 74.9%

March 31, 2017 427.9 144.5 121.6 161.8 283.4 66.2%

Dec 31, 2016 371.2 128.1 118.3 124.8 243.1 65.5%

As per 30 Sep. 2017 40% borrowings with fixed interest rate (60% is at risk

for interest rate change).

With hedging instruments (Interest rate swaps – IRS) we hedged

additional 38.2% of the Group‘s borrowings, so the borrowing share

with fixed interest rate a per 30 Sep. 2017 amounts 78.2%.

33

34

LONG TERM INTEREST RATE STABILITY


IRS forward start 2018 2019 2020 2021 2022 IRS level

Dec 2018 170 0.49%

Dec 2019 60 0.65%

Dec 2020 30 0.80%

Dec 2021 30 0.95%

New hedging

(cumulative)170 230 260 290 0.55%

Existing hedging 241 171 100 65 22

Total Hedging 241 341 330 325 312

In line with interest rate hedging policy during Q3 2017 we concluded IRS in

amount of EUR 290m for the 5 years period (with forward start on 1st

January 2019 until the end of year 2022) with the goal to hedge

approximately 90% of the projected total borrowings of Gorenje Group.

35

CREDIT RISK MANAGEMENT AND EXPOSURE


Increasing the share of insured receivables (>70%)

Acceptable credit instruments are defined in the renewed Group‘s credit

management policy: insurance with credit insurance companies, first class

unconditional bank guaranty, unconditional L/C, first class mortgage (based on the

special confirmation), counter liability to the same partner and factoring of the

receivables.

Insurance with credit insurance companies represents more than 73% of insured

receivables, followed by bank guaranties (> 9%).

Centralized receivables control: Receivables of respective companies are

monitored from the aspect of maturity, any excess of security/insurance limits, and

acceptability of credit instruments.

EURm 31 Dec 2015 31 Dec 2016 30 Sep 2017

Trade receivables (GROUP) 161.0 165.8 221.5

Trade receivables (DA) 137.7 139.7 186.9

% of insured receivables (GROUP) 62.9% 65.9% 72.6%

% of insured receivables (DA) 64.9% 70.8% 75.9%

35

INCOME STATEMENT (Period)

36


36

Income statement

of Gorenje Group (EURk)

PYRP

comp.% ACTP %

ACTP/

PYRP

Net Sales Revenues 900,853 96.9% 943,923 96.1% 104.8

Change in inventories 15,004 1.6% 14,191 1.4% 94.6

Other operating income 13,500 1.5% 23,645 2.4% 175.1

Gross yield 929,357 100.0% 981,759 100.0% 105.6

Cost of goods, materials and services -677,525 -72.9% -720,349 -73.4% 106.3

Cost of goods sold -170,830 -18.4% -189,563 -19.3% 111.0

Cost of materials -352,521 -37.9% -365,762 -37.3% 103.8

Cost of services -154,174 -16.6% -165,024 -16.8% 107.0

Other operating expenses -20,152 -2.2% -18,872 -1.9% 93.6

Added Value 231,680 24.9% 242,538 24.7% 104.7

Labour Costs -175,808 -18.9% -183,758 -18.7% 104.5

EBITDA 55,872 6.0% 58,780 6.0% 105.2

Amortisation and depreciation expense -35,342 -3.8% -40,738 -4.1% 115.3

EBIT 20,530 2.2% 18,042 1.8% 87.9

Net finance result -12,536 -1.3% -10,947 -1.1% 87.3

Net Foreign exchange result 1,019 0.1% -351 0.0% /

Net other financial result -13,555 -1.5% -10,596 -1.1% 78.2

Share in profits or losses of associates 58 0.0% -415 0.0% /

Profit or loss before tax 8,052 0.9% 6,680 0.7% 83.0

Income tax expense -3,908 -0.4% -2,035 -0.2% 52.1

Profit or loss for the period 4,144 0.4% 4,645 0.5% 112.1

37

NOTES TO INCOME STATEMENT

Comparable values for the year 2016 are adjusted for the effect of

impairment of receivables that were recorded in financial income and

expenses last year and among other operating income and expenses in

2017:

In 9M 2016 financial expenses pertaining to impairment of

receivables amounted to EUR 5.1 m, financial income from reversal

of impairment of receivables amounted to EUR 0.4m, net effect:

EUR -4.7m .

In 9M 2017 other operating expenses pertaining to impairment of

receivables amounted to EUR 2.0 m and other operating income

from reversal of impairment of receivables amounted to EUR 0.4m,

net effect: EUR -1.6m.

Non-adjusted categories for the period January - September 2016 are:

Added value EUR 236.4 m,

EBITDA EUR 60.6 m and

EBIT EUR 25.2 m.

37


BALANCE SHEET

38


38

Gorenje Group

Balance Sheet (EURk)PYRP % ACTP %

ACTP/

PYRP

NET ASSETS 753,851 100.0% 783,735 100.0% 104.0

Net non-current assets 532,191 70.6% 556,302 71.0% 104.5

Tangible and Intangible Assets 581,139 77.1% 601,699 76.8% 103.5

Non-current accounts receivables 2,754 0.4% 2,342 0.3% 85.0

Deferred tax assets 23,674 3.1% 24,735 3.2% 104.5

- Provisions -68,735 -9.1% -66,160 -8.4% 96.3

- Non-current operating liabilities -4,053 -0.5% -3,705 -0.5% 91.4

- Deferred tax liabilities -2,588 -0.3% -2,609 -0.3% 100.8

NWC 221,660 29.4% 227,433 29.0% 102.6

WC 518,753 68.8% 538,749 68.7% 103.9

Inventories 249,318 33.1% 258,494 33.0% 103.7

Trade receivables 212,328 28.2% 221,493 28.3% 104.3

Other current operational assets 57,107 7.6% 58,762 7.5% 102.9

- Current operational liabilities -297,093 -39.4% -311,316 -39.7% 104.8

- Trade payables -191,248 -25.4% -201,062 -25.7% 105.1

- Other current operational liabilities -105,845 -14.0% -110,254 -14.1% 104.2

NET INVESTED CAPITAL 753,851 100.0% 783,735 100.0% 104.0

Equity 369,970 49.1% 381,133 48.6% 103.0

Net Debt 383,881 50.9% 402,602 51.4% 104.9

- Financial investments -21,221 -2.8% -14,453 -1.8% 68.1

- Cash and cash equivalents -21,558 -2.9% -24,033 -3.1% 111.5

= Financial liabilities total 426,660 56.6% 441,088 56.3% 103.4

Non-current financial liabilities 274,221 36.4% 310,606 39.6% 113.3

Current financial liabilities 152,439 20.2% 130,482 16.6% 85.6

CASH FLOW STATEMENT

39


39

in EURk PYRP ACTP

A. CASH FLOWS FROM OPERATING ACTIVITIES

Profit or loss for the period 4,144 4,645

Adjustments for:

-Depreciation of property, plant and equipment 28,707 32,431

-Amortisation of intangible assets 6,635 8,307

-Investment income -3,724 -3,478

-Finance expenses 20,882 14,840

-Gain on sale of property, plant and equipment -133 -539

-Income tax expense 3,908 2,035

Cash flow from operating activities before changes in net operating

current assets and provisions60,419 58,241

Change in trade and other receivables -55,157 -53,319

Change in inventories -23,418 -32,558

Change in provisions 1,274 -2,901

Change in trade and other payables 4,672 6,112

Cash generated from operations -72,629 -82,666

Interest paid -11,782 -10,114

Income tax paid -2,522 -2,148

Net cash from operating activities -26,514 -36,687

B. CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of property, plant and equipment 3,868 3,869

Interest received 449 520

Dividends received 58 -352

Divestment of subsidiary, exclusive of disposal financial assets 74 434

Acquisition of property, plant and equipment -35,498 -30,215

Acquisition of an associated company -1,130 0

Other investments -529 4,085

Acquisition of intangible assets -16,550 -16,254

Net cash used in investing activities -49,258 -37,913

C. CASH FLOWS FROM FINANCING ACTIVITIES

Borrowings/Repayment of borrowings 65,720 65,821

Payment of dividends 0 -2,430

Net cash used in financing activities 65,720 63,391

Net change in cash and cash equivalents -10,052 -11,209

Cash and cash equivalents at beginning of period 31,610 35,242

Cash and cash equivalents at end of period 21,558 24,033

40

IV. EXECUTIVE SUMMARY

AND KEY MANAGERIAL

ACTIVITIES

41

EXECUTIVE SUMMARY

Market growth, growth of material prices

Lower currencies volatility, stable low Interest rates

Revenue growth, market share stable also in 9M 2017

More premium and innovative products

Growth outside Europe, East Europe, Benelux

Lower sales in Germany, UK, Serbia

Revenue from Other businesses sales ahead of the planned

dynamics

In Q2 and Q3 pressure on material prices and wages

IV. EXEC. SUMMARY AND KEY MAN. ACTIVITIES

42

Specific measures to improve economics in Q4 2017 already

started. Focus on:

Budgeted revenues and margins

Production, purchasing, service costs reduction

Productivity improvement by labour cost reduction

Marketing cost reduction

Net working capital management

Focused investment and new product development

Key activities for sustainable deleveraging

KEY MANAGERIAL ACTIVITIES

IV. EXEC. SUMMARY AND KEY MAN. ACTIVITIES

Thank you

for your attention!

Gorenje Representatives

44

Mrs. Bojana Rojc

Head of IR & CFO Assistant

T +386 3 899 1346

M +386 51351706

E [email protected]

Gorenje, d.d.

Partizanska cesta 12, SI-3320

Velenje, Slovenia

www.gorenjegroup.com

Mr. Štefan Kuhar

Executive director, Finance, Tax

and Asset Management

T +386 3 899 7394

M +386 41 343 500

E [email protected]

Gorenje, d.d.

Partizanska cesta 12, SI-3320

Velenje, Slovenia

www.gorenjegoup.com

http://www.gorenje.com/

















45

Forward-looking statements

This presentation includes forward-looking information and forecasts – i.e. statements regarding the future, rather

than the past, and regarding events within the framework and in relation to the currently effective legislation on

publicly traded companies and securities and pursuant to the Rules and Regulations of the Ljubljana and Warsaw

Stock Exchange. These statements can be identified by the words such as "expected", "anticipated", "forecast",

"intended", "planned or budgeted", "probable or likely", "strive/invest effort to", "estimated", "will", "projected", or

similar expressions. These statements include, among others, financial goals and targets of the parent company

Gorenje, d.d., and the Gorenje Group for the upcoming periods, planned or budgeted operations, and financial plans.

These statements are based on current expectations and forecasts and are subject to risk and uncertainty which may

affect the actual results which may in turn differ from the information stated herein for various reasons. Various

factors, many of which are beyond reasonable control by Gorenje, affect the operations, performance, business

strategy, and results of Gorenje. As a result of these factors, actual results, performance, or achievements of Gorenje

may differ materially from the expected results, performance, or achievements as stated in these forward-looking

statements. These factors include but are not necessarily limited to following: consumer demand and market

conditions in geographical segments or regions and in industries in which the Gorenje Group is conducting its

operating activities; effects of exchange rate fluctuations; competitive downward pressure on downstream prices;

major loss of business with a major account/customer; the possibility of late payment on the part of customers;

decrease in prices as a result of persistently harsh market conditions, in an extent much higher than currently

expected by Gorenje's Management Board; success of development of new products and their implementation in the

market; development of manufacturer's liability for the product; progress of attainment of operative and strategic goals

regarding efficiency; successful identification of opportunities for growth and mergers and acquisitions, and integration

of such opportunities into the existing operations; further volatility and aggravation of circumstances in capital

markets; progress in attainment of goals regarding structural reorganization and reorganization in purchasing. If one

or more risks or uncertainties are in fact materialized or if the said assumptions are proven wrong, actual results may

deviate materially from those stated as expected, hoped for, forecast, projected, planned, probable, estimated, or

anticipated in this announcement. Gorenje allows any update or revision of these forecasts in light of development

differing from the expected events.

presentation of the gorenje group business performance 9m...

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