Gorenje East Europe Orders to Rise as Appliance Market Recovers, CEO Says

Gorenje Group d.d., a Slovenian appliance maker, wants to increase sales to more than 1.2 billion euros ($1.53 billion) by year’s end as a recovery in orders led by in Russia and Ukraine takes hold.

Gorenje, Slovenia’s second-largest exporter after the Renault SA unit in Novo Mesto, is benefiting from the economic recovery in the region after orders crashed in early 2009 when the financial crisis pushed the country into the deepest recession in the euro region, Chief Executive Officer Franjo Bobinac said.

“The situation is still difficult, but we have a decent increase in orders for the coming months,” Bobinac said in an interview at Gorenje’s headquarters in Velenje, Slovenia. “The last quarter is a big unknown, but in our industry the fourth quarter is usually one of the best in terms of both revenue and profit.”

The Slovenian company was profitable in the first half as sales of refrigerators, cookers and washing machines in eastern Europe picked up. The 4.5 million-euro acquisition of Swedish rival Asko Appliances Group, integrated into Gorenje from Aug 1, will help increase Europe-wide sales, Bobinac said. Asko has a 50-year tradition in producing dishwashers, expanding Gorenje’s line of products in northern Europe and North America.

“With this acquisition we are starting to produce a fourth line of products, dishwashers, which wasn’t covered up to now,” Bobinac said. “It’s also about the repositioning of Gorenje, which cannot happen without the distinctive portfolio of brands to cover all price segments and distribution channels.”

IFC Stake

The International Finance Corp., the financing arm of the World Bank, last month became the second-largest shareholder of Gorenje, with an 11.8 percent stake after an equity investment of 25 million euros, helping Gorenje restructure its debt with loans of as much as 150 million euros.

The purchase of Asko Group is the second acquisition in the last three years after Gorenje acquired Atag Europe BV of the Netherlands for 130 million euros, the largest buyout in the company’s history.

Bobinac says there may be more purchases as the company expands.

“It can never be over,” he said. “It’s not just the acquisition for the right price, but it has to have strategic value so that the story is a successful one in the long run.”

To contact the reporter on this story: Boris Cerni in Ljubljana, Slovenia, at bcerni@bloomberg.net

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