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Gorenje Half-Year Profit Down by 64% (adds)

Velenje, 24 August (STA) - The group around household appliance maker Gorenje reported a EUR 2.3m net profit for the first six months of 2012 on Friday. This is almost a 64% drop year-on-year and comes on the back of a 3.3% decrease in sales revenues to EUR 618.6m and unfavourable currency exchange movements.

The company pointed to the debt crisis, the high level of unemployment, high prices of raw materials, payment defaults and unfavourable currency fluctuation as the main reasons for the poorer performance.

Sales revenues improved in the second quarter of the year compared to the first, only trailing last-year's by 1%, the 3.3% half-year decrease is however only calculated if one ignores for 2011 the July sale of energy group Istrabenz Gorenje.

Operating profit was at EUR 16.5m, a 7.2% drop compared to the first six months of 2011, however with the EBIT margin rising from 2.4% to 2.7%.

In the first six months the Gorenje group managed to increase sales revenues in Germany, Russia, the US and Australia, this was however spoilt by the performance on some of the markets in SE Europe, especially in the furniture segment.

Operations in Scandinavia are improving, the costs of the restructuring of Swedish subsidiary Asko however continued to negatively affect performance.

The core company generated EUR 11.9m in net cash flow and EUR 0.9m in free cash flow in the second quarter. The positive trend with regard to free cash flow is expected to continue in the second half of the year.

The net financial debt decreased by EUR 22m compared to the same period last year, while the share of long-term commitments increased from 52.4% to almost 59%.

In the first half-year Gorenje grew most in Russia and non-European markets, especially America, Australia as well as the Far and Middle Eat. Growth outside of Europe was at 6.6% and in Eastern Europe at 3.2%.

Gorenje highlighted among its key activities the ongoing optimisation of production locations. The production of kitchen stoves has already been moved from Finland to the Czech Republic, while the production of washing and drying machines and dishwashers from Sweden to Slovenia will be completed next year.

Also, Gorenje started at the end of July with the expansion of its refrigerator factory in Serbia's Valjevo.

Gorenje chairman Franjo Bobinac said in a press release that the situation on the markets remains unpredictable and full of challenges.

"The battle for market shares and the right sales structure on the one side and at the same time a stepped optimisation of production locations and cost management are the key activities we are focusing until the end of the year," he added.

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