Presentation of the Gorenje Group Business Performance 9M...
Transcript of 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
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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
1.2% more than in 9M 2016
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
26.0% more than in 9M 2016
We generated net profit of EUR 4.6m.
EUR 0.2m more than in 9M 2016 (+12.1%)
I. HIGHLIGHTS
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5
II. BUSINESS REPORT
IN 9M 2017
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2.1. GROUP PERFORMANCE
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
2.1. GROUP PERFORMANCE
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%
2.1. GROUP PERFORMANCE
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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
2.1. GROUP PERFORMANCE
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%
2.1. GROUP PERFORMANCE
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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.
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2.1. GROUP PERFORMANCE
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
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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.
2.1. GROUP PERFORMANCE
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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.
2.1. GROUP PERFORMANCE
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COMPARABLE ADDED VALUE
2.1. GROUP PERFORMANCE
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
2.1. GROUP PERFORMANCE
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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)
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Period Q3
PYRP ACTP PYRQ ACTQ
55.9 58.8 19.7 18.2
5.2% -7.4%
COMPARABLE EBIT
2.1. GROUP PERFORMANCE
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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
2.1. GROUP PERFORMANCE
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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%
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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.
2.2. PERFORMANCE OUTLOOK
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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.
2.2. PERFORMANCE OUTLOOK
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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.
2.2. PERFORMANCE OUTLOOK
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III. FINANCIAL REPORT
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KEY BUSINESS ACTIVITIES
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.
3.1. FINANCIAL MANAGEMENT
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KEY BUSINESS ACTIVITIES
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.
3.1. FINANCIAL MANAGEMENT
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FINANCE INCOME AND EXPENSES
3.1. FINANCIAL MANAGEMENT
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
3.1. FINANCIAL 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
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3.1. FINANCIAL MANAGEMENT
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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%.
3.1. FINANCIAL MANAGEMENT
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.
3.1. FINANCIAL MANAGEMENT
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.
3.1. FINANCIAL MANAGEMENT
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)
3.1. FINANCIAL MANAGEMENT
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
3.1. FINANCIAL MANAGEMENT
32
CURRENCY RISK MANAGEMENT AND EXPOSURE
3.1. FINANCIAL MANAGEMENT
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
3.1. FINANCIAL MANAGEMENT
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
3.1. FINANCIAL MANAGEMENT
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
3.1. FINANCIAL MANAGEMENT
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
3.2. GROUP FINANCIAL STATEMENTS
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
3.2. GROUP FINANCIAL STATEMENTS
BALANCE SHEET
38
3.2. GROUP FINANCIAL STATEMENTS
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
3.2. GROUP FINANCIAL STATEMENTS
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
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
Gorenje, d.d.
Partizanska cesta 12, SI-3320
Velenje, Slovenia
www.gorenjegoup.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.