Mrs. Jožica Turk, Executive

vice President Corporate

Finance

Friday, March 23, 2018

Gorenje Group

Annual Report 2017

2

1. INTRODUCTION OF GORENJE GROUP

2. GORENJE GROUP ANNUAL REPORT

2017

3. BUDGET 2018

4. FINANCIAL MANAGEMENT: ACTUAL

2017 AND BUDGET 2018

AGENDA

3

1. INTRODUCTION OF

GORENJE GROUP

ONE OF THE LEADING EUROPEAN

MANUFACTURERS OF DOMESTIC APPLIANCES

4

OWN

PRODUCTION

Slovenia

Serbia

Czech RepublicCONSOLIDATED

REVENUE 2017

EUR 1.310 billion

AVERAGE

NUMBER OF

EMPLOYEES 2017

11,039

GLOBAL

PRESENCE

90 Countries

Worldwide,

mostly in Europe (91%),

also in USA, Australia,

Near and Far East

CORE BUSINESS

Domestic Appliances

(MDA, SDA)

Gorenje

Group

EXPORT

95%

of sales

R&D COMPETENCE

CENTRES

Slovenia

Czech Republic

Sweden

Netherlands

MDA (major domestic appliances)

SDA (small domestic appliances)

5

BUSINESS ACTIVITIES

~83% ~17%

Revenue 2017

CORE BUSINESS

Domestic Appliances:

MDA

•SDA

Ecology•

Tool making•

Engineering•

Hotel and catering•

Trade•

HVACBAK

OTHER BUSINESS

MDA / Major Domestic AppliancesSDA / Small Domestic AppliancesHVACBAK / Heating, Ventilation, AirConditioning, Bathroom and Kitchen

6

1950

Founded in the

village Gorenje

1960

Production in

Velenje begins

1961-1970

Production of

washing machines

and refrigerators

1964

Production in Velenje,

New plant for

cooking appliances

1971

First sales subsidiary

abroad (Munich)

1991

Slovenia becomes

independent, loss of

the former domestic

market

1958

Manufacturing

of stoves

1961

First export

(to Western

Germany)

1961-1970

Acquisitions of

companies bringing

synergies to the core

Business “Everything

for Home“

Setting-up own

distribution network

in Western Europe

1991-1996

Strong expansion

abroad

MORE THAN 60 YEARS OF TRADITION

1998

Gorenje, d.d.,

becomes a

public company, listed

on the

Ljubljana Stock

Exchange

FAST DEVELOPMENT IN THE LAST DECADE

7

2006

New refrigerator

& freezer plant

in Valjevo,

Serbia

2010

Acquisition of the

company ASKO,

Sweden

2013

Strategic

Alliance with

Panasonic

Listing on WSE

2005

Acquisition of

the Czech cooking

appliances

manufacturer Mora Moravia

2010

IFC, a member of

the World Bank,

enters the ownership

structure

(…)

2008

Acquisition of the

company ATAG,

the Netherlands

2014

Positive effects of

restructuring2012

Restructuring

of production

facilities and sales

organization begins,

disposal of furniture

manufacturing

business

2015

The first year of new

2016-2020 Strategy

execution: key

objectives

accomplished

2015-2016

8

GORENJE GROUP MACRO-ORGANIZATION AND LOCATIONS

Thoughtfully constructed sales network,

which will be expanding outside Europe.

CORE ACTIVITY ORGANIZATION DOMESTIC APPLIANCES*

PARENT COMPANY Gorenje, d.d.

HOLDING COMPANIES 3

SALES BUSINESS UNITS 42 (incl. representative offices)

PRODUCTION LOCATIONS

(Slovenia, Serbia, Czech Republic)

5

Bangkok

9

Slovenia, Velenje

High value-added products – cooking

appliances, dishwashers, and

advanced washing machines and

dryers, and niche refrigeration

appliances.

Czech Republic, Mariánské údolí

Free-standing cookers

Serbia

Valjevo, Zaječar

Cooling appliances and entry-level

washing machines and dryers

23.6%

62.8%

13.6%

PRODUCTION SITES (MDA) in THREE COUNTRIES

10

We have 380 employees in R&D,

working on 30 major development

projects, running in parallel.

Other business areas are also

actively involved in these projects.

R&D COMPETENCE CENTRES

Cooperation with international

institutions, knowledge and

excellence centres.

11

RUSSIA THE NETHERLANDSGERMANY

SCANDINAVIASERBIACZECH REPUBLICSLOVENIACROATIA

AUSTRALIAUSA

UKRAINNE

HUNGARY

BOSNIA AND HERZEGOVINA

AUSTRIA

POLAND

ITALY

SLOVAKIA

ROMANIA

BULGARIA

BELGIUM

FRANCE

GREAT BRITAIN

CHINA

Source: Data 2017

MOST IMPORTANT SALES MARKETS:

Russia, the Netherlands and Germany

12

Implementing a multi-brand strategy with attention on the upper-mid and premium price

segment.

GORENJE GROUP BRAND PORTFOLIO

13

OWNERSHIP STRUCTURE

13

As at December 31, 2017, there were 12,247 shareholders entered in the share

register, which is 8.7% less than at the end of 2016 (when there were 13,415).

Ten major shareholdersNo. of shares(31 Dec 2017)

Stakeholder share (in %)

KAPITALSKA DRUŽBA D.D. 3,998,653 16.37%

INTERNATIONAL FINANCE CORPORATION 2,881,896 11.80%

PANASONIC CORPORATION 2,623,664 10.74%

KDPW – FIDUCIARY ACCOUNT 1,879,898 7.70%

HOME PRODUCTS EUROPE B.V. 1,221,231 5.00%

RAIFFEISEN BANK AUSTRIA D.D. – FIDUCIARY ACCOUNT 1,134,073 4.64%

ZAGREBAČKA BANKA D.D. - FIDUCIARY ACCOUNT 927,542 3.80%

BNP PARIBAS SECURITIES SERVICES S.C.A. 900,100 3.69%

UNICREDIT BANK AUSTRIA AG – FIDUCIARY ACCOUNT 856,926 3.51%

ADDIKO BANK D.D. - FIDUCIARY ACCOUNT 642,953 2.63%

Total ten major shareholders 17,066,896 69.88%

Treasury shares 121,311 0.50%

Other shareholders 7,236,316 29.62%

Total 24,424,613 100%

EXPLORATION OF STRATEGIC PARTNERSHIP OPPORTUNITIES

Gorenje Group’s strategic guidelines have been constantly driving the

group towards the exploration of potential strategic alliance

opportunities aimed at:

pursuing growth of business,

economies of scale to guarantee cost competitiveness,

strengthening brand power,

accessing prime distribution channels,

accelerating product innovation and business digitalisation.

The globalisation and consolidation trends which have been

characterizing the white good industry over the last years, have further

stimulated the group to proactively search for available strategic

partnership opportunities.

14

EXPLORATION OF STRATEGIC PARTNERSHIP OPPORTUNITIES

Based on a preliminary analysis of trends in the household

appliances industry and related potential strategic alliance

opportunities, prepared by Rothschild & Co, Gorenje decided to start

with the active search for a suitable strategic partner, that would:

support Gorenje Group’s long-term and sustainable growth

and development,

whereby these activities could also lead to a participation of

the selected strategic partner in Gorenje’s share capital.

Rothschild S.p.A., Italy, part of the reputable international investment

bank Rothschild & Co, was appointed as financial advisor, and the

Law office Jadek & Pensa of Ljubljana for legal support in the

process.

These activities should be concluded by the end of the third

quarter of 2018.

15

UPDATE ON THE ONGOING EXPLORATION OF STRATEGIC

PARTNERSHIP OPPORTUNITIES

Following the execution of a non-disclosure agreement, in the second half of

January 2018 an information package and a process letter were

dispatched to potential partners who confirmed their interest in further

assessing a potential for partnering with Gorenje Group.

On March 7, 2018 Gorenje, d.d. received 4 non-binding offers from

potential Asian strategic partners. All of them are active in household

appliances industry.

Following a thorough analysis and review of all 5 non-binding partnership

offers received, Gorenje has invited 3 potential partners, into the due

diligence phase of the process. All 3 have submitted offers to acquire a

majority stake in the company (at least 50% +1 shares of the whole share

capital).

In the due diligence phase of the process potential partners will be granted

access to a virtual data room on the Gorenje Group from March 23, 2018

onwards, they will also be invited to selected site visits at Gorenje Group

facilities as well as meetings with top management during April 2018.

The deadline for submitting binding offers has been set for May 8, 2018.

The next update on the process will be provided by May 15, 2018.16

17

2. ANNUAL REPORT 2017

2017 HIGHLIGHTS

Gorenje Group sales revenue: EUR 1,309.9m

4.1% more than in 2016

0.4% less than budgeted for 2017

Revenue from Domestic appliances sales: EUR 1.081.7m

0.4% more than in 2016

4.2% less than budgeted for 2017

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

Price index stable at 87 (28 EU Countries)

Premium products accounted for 28.8% in 2017 (+1.6 p.p.)

Innovative products accounted for 21.0% in 2017 (+1.5 p.p.)

Sales revenue in Other businesses: EUR 228.2m

25.9% more than in 2016

22.3% more than budgeted for 2017

We generated net profit of EUR 1.3m.

EUR 7.1m less than in 201618

19

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 have been

launched at 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. A lot of activities have been launched in order mitigate difficulties

in production, delays and quality issues in order to secure better productivity.

Cost management activities, including labour cost initiatives (White collars)

and optimisation of cost of services on all levels.

We have received waivers from all financial partners, related to the breach

of financial covenant Net financial liabilities / EBITDA as of end 2017.19

20

REVENUE STRUCTURE BY BUSINESS

Budgeted share of DA for 2017 was 85.8%, and the achieved share was

actually lower due to:

disproportional growth of sales revenues in Other Businesses and

4.2% lower than budgeted sales in DA.20

21

DOMESTIC APPLIANCES REVENUE STRUCTURE

BY BRANDS

Growth of share of premium brands ASKO (0.9 p.p.) and ATAG (0.2 p.p.).

Share of Others dropped for 1.7 p.p. due to Panasonic.

21

22

Favourable product structure of DA sales with growing sales in dishwashers

(+14.2%), cooking appliances (+0.1%) and SDA (+18.4%).

Growth of share of dishwashing programme (1.4 p.p.) and small domestic

appliance programme (0.7 p.p.).

DOMESTIC APPLIANCES REVENUE STRUCTURE

BY PROGRAMS

22

23

EXECUTIVE SUMMARY

Market growth, growth of material prices

Increase of labour cost due to worsened productivity connected

to the launch of several new generations, and other reasons

Revenue growth, stable market shares in 2017

Revenue from Domestic appliances sales in in

H2 deteriorated (lagging behind planned dynamics)

Lower sales in Germany, UK

Growth outside Europe, East Europe, Benelux

More premium and innovative products

Lower currencies volatility, stable low Interest rates

Revenue from Other businesses sales higher than budgeted

24

Specific measures to improve economics with the focus on:

Growth of revenues and margins

Production, purchasing, service costs reduction

Productivity improvement by labour cost reduction

Net working capital management

Focused investment and new product development

Key activities for sustainable deleveraging

KEY MANAGERIAL ACTIVITIES

25

3. BUDGET 2018

BUDGET 2018 HIGHLIGHTS

Gorenje Group sales revenue: EUR 1,328.0m

1.4% more than 2017

6.8% more than comparable sales revenues in 2017

Revenue from Domestic appliances sales: EUR 1,188.7m

9.9% more than 2017

Planned growth of all brands; 20.9% planned growth of Asko brand

Premium products will account for 30.4% in 2018 (+1.6 p.p.)

Innovative products accounted for 22.2% in 2018 (+1.2 p.p.)

Sales revenue in Other businesses: EUR 139.3m

39.0% less than 2017. Decline in Other business is explained mostly by

divestment process of Gorenje Surovina, Gorenje Tiki and coal business. The

effect of this divestment will be of EUR 71m less sales compared to 2017.

We are planning a net profit of EUR 8.1m

EUR 6.8m more than in 2017

26

27

MDA MARKET FORECAST FOR 2018

28

KEY BUSINESS ACTIVITIES IN 2018

Growth of sales revenues supported by:

Launch of several new generations in year 2017 and further

launch of new generations planned for 2018 (Build-in cooking, new

laundry generation for Gorenje brand, professional and premium

dishwashers, connected appliances…)

New products on the market enable higher average prices of the

products compared to the old generations

Selective price increases on the markets

Introducing new markets

Higher investments into marketing and R&D compared to previous

year

Better productivity:

following the lunch of several new generations in year 2017 with

difficulties in production, delays and quality adjustment, smooth

production is planned for 2018 resulting in increased productivity in

direct production and less costs connected to the harsh conditions in

2017

28

28

29

KEY BUSINESS ACTIVITIES IN 2018

Cost management activities:

Labour cost initiatives: Decrease of white collar employees,

further negotiations with trade unions and lower labour cost

related to the management (no bonuses planned)

Optimisation of cost of services on all levels

Implementation of new suppliers and search of optimal (global-

local) combination of supply sources. Radical increase of share

of most competitive suppliers.

Optimisation of the use of material in production

Divestment activities with the key aim to deleverage the Group and

to focus managerial activities primarily to the Domestic appliances

segment

Activities with financial partners will be primarily focused on trade

financing activities and sustainable maturity profile

Strategic partnership activities

29

29

BUDGETED REVENUE GROWTH

30 30

30

Growth of revenues in Domestic appliances segment :

~ 10 % more than in 2017 as result of:

Higher sales in units (~ 4 p.p. of budgeted growth),

Better structure (~ 4 p.p. of budgeted growth),

Prices level increase (~ 2 p.p. of budgeted growth).

REVENUE STRUCTURE BY BUSINESS SEGMENTS

31 31

31

Growth of revenues in Domestic appliances segment (BUD 2018/2017) in all

brands

with high growth of ASKO (+20.6%)

ATAG by +13.5% and

Gorenje by +8.6%

Budgeted share of DA for 2018 is 89.5% (6.9 p.p. more than estimated for 2017)

Revenues in Other Businesses are declining due to planned divestment of

Gorenje Surovina and Gorenje Tiki in year 2018 and divestment of coal business in

year 2017.

DOMESTIC APPLIANCES REVENUE STRUCTURE BY BRANDS

32 32

32

Growth of revenues in Domestic appliances in all brands with higher growth of

ASKO and ATAG.

Share of ASKO brand will further increase for 1.1 p.p. and will amount to 12.2% and

share of ATAG will improve for 0.3 p.p. to 5.2% of DA revenue.

DOMESTIC APPLIANCES REVENUE STRUCTURE BY PROGRAM

33 33

33

Growth of revenues of Cooking appliances (high growth of new generation FS

Cookers with additional functionalities.

Growth of revenues of Laundry appliances:

ASKO: full year of sales of new generation in Australia and Scandinavia

Gorenje: new generation WM.

GROWING OF PREMIUM AND INNOVATIVE APPLIANCES IN

DOMESTIC APPLIANCES SALES

34

34

Share of premium products in revenue

will increase to 30.4% (+ 1.8 p.p).

Improvement in share of

premium products due to: Australia, Israel

(Gorenje), Russia, Benelux, Gorenje

Gulf, Kazakhstan, Gorenje Polska.

Share of Innovative products

in revenue will increase to 22.2%

(+ 1.2 p.p).

KEY BUSINESS ACTIVITIES – GORENJE BRAND

General price level increase

Launch of new generation of Laundry

Return to the growth of sales in Western Europe

Keeping favourable Brand position in Eastern Europe

Further sales growth in Overseas Region

Due to stronger pressure from internet channel, focus on channel

management

Gain benefit from sponsorship projects of the EHF Champions League,

the European Handball Championship 2018, Slovenian Nordic team and IFA

fair 2018

Continuing with product Complexity management – reducing number of

products/sales value ratio (20% SKU in stock reduction in 2017)

Reducing average stock inventory in days.

35

KEY BUSINESS ACTIVITIES – ATAG BRAND

Implementation of redefined brand strategy for ATAG, Pelgrim and

ETNA:

ATAG will be promoted as consumer brand with emphasize on a

wide visibility and premium positioning.

Pelgrim will be strongly promoted by the specialist retailer

ETNA will be promoted via both offline and online activities.

Implementation of restructuring of sales team with focus on kitchen

retail, replacement and projects.

Continuing of optimization of after sales service processes including

implementation of new tools (Web chat, Work force management)

First installation of Connectivity products in a pilot project (Hof van

Holland, Hilversum, Netherlands).

Ambitious plan to regain market share and premium position in

Belgium.

36

37

ASKO 2018 budget shows a solid growth of the turnover, margin and unit

revenue. The turnover in 2018 is estimated to grow for more that 20%.

General price level increase.

The growth will be supported by the finalization of the launch of the new

range of WM, TD and DW, consolidation of the most important

market and opening of new markets.

We will continue to implement all the specific activities so to increase

our Built-in mix.

The regions where we are planning the highest growth are Oceania

and Asia.

We are planning to be present in Eurocucina (will represent the main

activity for the Built-in growth) and IFA.

Store displays will be created around the world, along with smaller

product displays .

Redefinition of the online experience to convey the value of the brand

and its Scandinavian heritage (redesign of the websites to leverage the

new communication concept).

KEY BUSINESS ACTIVITIES – ASKO BRAND

37

37

KEY BUSINESS ACTIVITIES – R&D

Budgeted expenditures in 2018 for R&D will amount to EUR 38.8m (2.9%

of Group revenues; 2.5% in 2017).

Most of investments will be dedicated to the acquisition of new products.

Implementation of Digital strategy: providing connected products and

systems; rollouts to countries.

Execution of strategy of fast expansion of own competences on the

field of Electronics R&D;

In 2018 we will:

finalize development of built-in induction and gas hobs (mid),

develop new platforms for built-in ovens (mid & premium) and hobs

(premium),

work on development of a new platform of freestanding

refrigerators (60cm width),

upgrade washing machines for premium brand Asko,

develop a new generation of Asko professional washing machines,

finalize development of professional dishwasher,

developed the design line Simplicity 2.1,

continue to develop connected appliances.

38

INVESTMENTS

39

EUR 75.7m of investments in 2017 in comparison to EUR 83.2m in 2016.

Planned investments in year 2018 are significantly lower compared to

previous years; app. EUR 1.6m decrease relates to the divestment

activities. of Gorenje Surovina and Gorenje Tiki in the second half of 2018.

EURk 2017 BUD 2018

Investments in new products 23,786 14,080

R&D investments 20,443 25,339

Improvement of competitiveness 20,105 15,849Investment into network sales

activities 3,076 1,993

Investment in Other business 8,289 5,272

TOTAL INVESTMENT 75,699 62,533

EURk 2017 BUD 2018

GORENJE GROUP 75,699 62,533

DOMESTIC APPLIANCES 67,410 57,260

OTHER BUSINESS 8,289 5,272

TOTAL INVESTMENT 75,699 62,533

COST OPTIMISATION ACTIVITIES IN PRODUCTION

Main goal is to improve competitiveness with coordinated and

focused approach on:

Cost optimizing:

Material cost optimization (MCO) activities:

alternative suppliers, alternative components,

reduction of raw material consumption,

Further automatization / robotization in

production (better productivity),

Improvement of organizational productivity in

production,

Production overhead optimisation.

40

OPTIMISATION OF LABOUR COSTS

Continuing the project of decreasing labour costs.

Decreasing the number of white collar employees in Gorenje

Group:

target -10% until the end of Q3 2018 (-296)

from 1st June 2017 until the end of 2017, the number of WC

employees in the Group decreased by 120 employees

Continuation of social dialogue with trade unions

The project of Career Development for International

Placement will begin in 2018.

Employer Branding - Hackathons, Career Fairs, Gorenje‘s

reward for different projects.

Continuing with the development of key competencies,

succession planning, carrier development for Gorenje Group

employees.

41

KEY BUSINESS ACTIVITIES - PURCHASING

1. Further development of reliable and cost competitive procurement

base

Continuous search for new suppliers and optimal (global-local)

combination of supply sources (sourcing footprint).

Excellence in Category management (Cirtuo project).

Change of sourcing model (from „Framework agreement“ to „Category

review“ sourcing).

2. Optimization of Trade payables through prolonged payment terms:

Strong negotiation pressure on payment terms.

Providing to suppliers SCF (Supply chain factoring) solution.

Allowing to suppliers to use their own factoring solution.

3. Risk Management

Better risk-mapping through category management.

Accurate development of proper risk-mitigation activities for different types

of risks: Currency risk, Raw material risk, Supply risk, Quality risk.

4. Support to R&D projects

42

43

4. FINANCIAL MANAGEMENT:

ACTUAL 2017 AND

BUDGET 2018

44

KEY BUSINESS ACTIVITIES

All waivers for the breach of the Net financial liabilities / EBITDA covenant

has been obtained from financial partners prior to the end of 2017.

We have prepared and are leading a range of measures and activities to

ensure decrease of Gorenje Group debt in year 2018.

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).

Decrease of inventories by aligning production with planned sales is

integrated in the planning process for 2018.

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). Capex aligned with depreciation in year 2018 and in

following years:

CAPEX 2017 ~ EUR 75.7m (depreciation ~ EUR 55m),

CAPEX B2018 ~ EUR 62.5m (depreciation ~ EUR 61m).

Divestment activities are carried out in line with the budgeted schedule.

44

45

KEY DIVESTMENT ACTIVITIES IN 2018

Divestment of non-core assets and businesses:

• In year 2017 we have divested the share in company Erico and business

activities, related to the sale of coal.

• divestment of the biggest company within Other Businesses (Gorenje

Surovina) in in process:

• envisaged sale date 1 July, 2018.

• We have already started divestment process for company Gorenje Tiki

and related Heating and ventilation business.

• envisaged sale date 1 October, 2018.

• Other potential disposals within the business segment Other Businesses

are in the evaluation process.

• We have launched accelerated divestment process for real estate as

well.

Estimated budgeted proceeds from disposals received in year 2018 amounts

to EUR 65m.

Proceeds from disposals will be used for deleveraging and keeping stable

maturity profile.

45

www.gorenjegroup.com

INDICATORS/CovenantsConditions

20172016 Audited 2017 Audited

Net financial debt / EBITDA < 4 3.9 4.7

EBITDA / net interest expense > 4 6.2 6.5

Equity – equity attributable to non-

controlling interest > EUR 220 million 372.1 366.2

Net financial debt / Equity attributable to

non-controlling interest < 1.2 0.92 0.98

COMPLIANCE WITH FINANCIAL COVENANTS

46

The financial covenant „Net financial liabilities / EBITDA < 4“ was not met at the end

of 2017. All other financial covenants were met.

We received waivers from all financial partners.

OUR COMMITMENTS TO FINANCIAL PARTNERS FOR YEAR 2018:

1. Sale of non-core assets and businesses in minimum value of EUR 50m with best effort target of

EUR 80m with proceeds being used for pro-rata deleveraging.

2. CAPEX at group level limited to EUR 65m.

3. Management Board will not propose any dividend distribution in year 2018.

4. In year 2018, meetings with financial partners will be organized quarterly; first meeting with the

banks was held on February 15th, 2018.

47

FINANCIAL LIABILITIES

Total and net financial liabilities in EUR million and changes

As at December 31, 2017, net financial liabilities amounted to EUR 358.7m, which is

2.9% higher than at the end of 2016, mainly due to worsened profitability in H2 2017.

In 2017 the net financial liabilities to EBITDA ratio was at 4.7 or 0.3 worse than

comparable 2016. Important decrease is planned for 2018 (3.2 ratio)

Net financial liabilities to EBITDA ratio is comparable for the whole observed period.

We have improved the maturity profile of our financial liabilities by 3.3 p.p. Long-term

liabilities now account for 76.4%.47

397.4367.6 362.0 376.8 383.8

294.2

357.9331.5 330.4 341.6

358.7

274.4

5.8

4.3 4.34.3 4.7

3.2

0

1

2

3

4

5

6

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

31.12.2013 31.12.2014 31.12.2015 31.12.2016 31.12.2017 31.12.2018

Total financial liabilities Net financial liabilities Net financial liabilities/EBITDA

207.5175.1

142.3 144.9 143.3106.2

16.6%

14.0%

11.6% 11.5% 10.9%

8.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

0.0

50.0

100.0

150.0

200.0

250.0

31.12.2013 31.12.2014 31.12.2015 31.12.2016 31.12.2017 B 31.12.2018

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

48

NET WORKING CAPITAL MANAGEMENT

48

A solid continuous reduction of the share of net working capital in

revenue with a strong potential for further decrease, supported by

supply chain financing.

Since the start of supply chain financing (August 2017), weighted

average contractual payment term, calculated from turnover in period

was prolonged for 10.4 days

STRUCTURE OF GORENJE GROUP NET FINANCIAL LIABILITIES

49

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

Net working capital (NWC) seasonal development:

• as of 31.12.2017 40% of NFL was related to NWC financing (EUR 143.3m),

while

• Within the year, when the majority of negative cash flow is generated, NWC

financing represents up to 55% of Net financial liabilities.

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

(2.8 as of 31 December 2017).

15

0.4

15

6.5

18

8.1

19

6.7

21

5.4

16

8.0

20

7.5

17

5.1

14

2.3

14

4.9

14

3.3

10

6.0

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

2013 2014 2015 2016 2017 B2018

EU

Rm

NFL* for long-term purposes NFL for fin. NWC** NFL/EBITDA (total) NFL for long-term purposes/EBITDA

*Net financial liabilities **Net working capital

50

Harsh competition with continued pressures on prices.

Increased power of distribution due to concentration in Russia.

Substantial growth of material and components prices with limited

possibilities to increase prices.

Continued pressure on labour costs due to shortage of work force

in Slovenia, Czech Republic and Serbia.

Volatile currency exchange rates due to global political and

economic issues (RUB, USD).

Divestment of Gorenje Surovina and Gorenje Tiki and related

impact on the fulfilment of their business plans.

KEY CHALLENGES IN 2018

Thank you

for your attention!------------

Q & A

52

Appendix:

GORENJE GROUP AUDITED

FINANCIAL STATEMENTS

52

INCOME STATEMENT

53 53

53

Income statement

of Gorenje Group (EURk)2016

comp.% 2017 % B. 2018 % 2017/ 2016

B. 2018/

2017

Net Sales Revenues 1.258.124 97,9% 1.309.932 98,2% 1.328.043 100,6% 104,1 101,4

Change in inventories 5.200 0,4% -15.117 -1,1% -20.264 -1,5% / 134,0

Other operating income 22.078 1,7% 39.440 3,0% 12.369 0,9% 178,6 31,4

Gross yield 1.285.402 100,0% 1.334.255 100,0% 1.320.148 100,0% 103,8 98,9

Cost of goods, materials and services -942.154 -73,3% -981.413 -73,6% -961.563 -72,8% 104,2 98,0

Cost of goods sold -250.392 -19,5% -261.602 -19,6% -235.742 -17,9% 104,5 90,1

Cost of materials -475.798 -37,0% -489.111 -36,7% -499.698 -37,9% 102,8 102,2

Cost of services -215.964 -16,8% -230.700 -17,3% -226.123 -17,1% 106,8 98,0

Other operating expenses -27.690 -2,2% -27.459 -2,1% -26.342 -2,0% 99,2 95,9

Added Value 315.558 24,5% 325.383 24,4% 332.243 25,2% 103,1 102,1

Labour Costs -235.325 -18,3% -249.012 -18,7% -245.898 -18,6% 105,8 98,7

EBITDA 80.233 6,2% 76.371 5,7% 86.345 6,5% 95,2 113,1

Amortisation and depreciation expense -47.055 -3,7% -54.676 -4,1% -61.050 -4,6% 116,2 111,7

EBIT 33.178 2,6% 21.695 1,6% 25.295 1,9% 65,4 116,6

Net finance result -20.022 -1,6% -17.360 -1,3% -13.090 -1,0% 86,7 75,4

Net Foreign exchange result -533 0,0% -345 0,0% -3.250 -0,2% 64,7 941,9

Net other financial result -19.489 -1,5% -17.015 -1,3% -9.840 -0,7% 87,3 57,8

Share in profits or losses of associates 84 0,0% 152 0,0% 372 0,0% 181,0 244,7

Profit or loss before tax 13.240 1,0% 4.487 0,3% 12.578 1,0% 33,9 280,3

Income tax expense -4.810 -0,4% -3.146 -0,2% -4.446 -0,3% 65,4 141,3

Profit or loss for the period 8.430 0,7% 1.341 0,1% 8.132 0,6% 15,9 606,4

BALANCE SHEET

54 54

54

Gorenje Group

Balance Sheet (EURk)

2016

comp.% 2017 % B. 2018 % 2017/ 2016

B. 2018/

2017

NET ASSETS 689.812 100,0% 711.207 100,0% 620.132 100,0% 103,1 87,2

Net non-current assets 544.905 79,0% 567.927 79,9% 513.952 82,9% 104,2 90,5

Tangible and Intangible Assets 590.041 85,5% 605.259 85,1% 552.299 89,1% 102,6 91,3

Non-current accounts receivables 2.481 0,4% 7.375 1,0% 7.978 1,3% 297,3 108,2

Deferred tax assets 27.236 3,9% 27.551 3,9% 24.864 4,0% 101,2 90,2

- Provisions -69.180 -10,0% -67.449 -9,5% -66.534 -10,7% 97,5 98,6

- Non-current operating liabilities -3.672 -0,5% -2.807 -0,4% -2.657 -0,4% 76,4 94,7

- Deferred tax liabilities -2.001 -0,3% -2.002 -0,3% -1.998 -0,3% 100,0 99,8

NWC 144.907 21,0% 143.280 20,1% 106.180 17,1% 98,9 74,1

WC 450.585 65,3% 462.043 65,0% 426.790 68,8% 102,5 92,4

Inventories 225.954 32,8% 220.619 31,0% 200.090 32,3% 97,6 90,7

Trade receivables 165.786 24,0% 180.517 25,4% 170.186 27,4% 108,9 94,3

Other current operational assets 58.845 8,5% 60.907 8,6% 56.514 9,1% 103,5 92,8

- Current operational liabilities -305.678 -44,3% -318.763 -44,8% -320.610 -51,7% 104,3 100,6

- Trade payables -223.725 -32,4% -229.402 -32,3% -239.361 -38,6% 102,5 104,3

- Other current operational liabilities -81.953 -11,9% -89.361 -12,6% -81.249 -13,1% 109,0 90,9

NET INVESTED CAPITAL 689.812 100,0% 711.207 100,0% 620.132 100,0% 103,1 87,2

Equity 366.541 53,1% 368.344 51,8% 360.555 58,1% 100,5 97,9

Net Debt 323.271 46,9% 342.863 48,2% 259.577 41,9% 106,1 75,7

- Financial investments -18.329 -2,7% -15.851 -2,2% -14.800 -2,4% 86,5 93,4

- Cash and cash equivalents -35.242 -5,1% -25.037 -3,5% -19.869 -3,2% 71,0 79,4

= Financial liabilities total 376.842 54,6% 383.751 54,0% 294.246 47,4% 101,8 76,7

Non-current financial liabilities 275.616 40,0% 293.020 41,2% 222.809 35,9% 106,3 76,0

Current financial liabilities 101.226 14,7% 90.731 12,8% 71.437 11,5% 89,6 78,7

CASH FLOW STATEMENT

55 55

55

in EURk 2016 2017 B. 2018

A. CASH FLOWS FROM OPERATING ACTIVITIES

Profit or loss for the period 8.430 1.341 8.132

Adjustments for:

-Depreciation of property, plant and equipment 37.724 43.274 46.261

-Amortisation of intangible assets 9.331 11.402 14.789

-Net exchange differences 534 345 3.250

- Dividends received -136 -215 -492

- Interest income -913 -935 -253

- Interest expense 15.033 12.741 12.072

- Gain on sale of property, plant and equipment -254 -531 -1.475

- Revenue/Expenses from the revaluation of investment property 0 65 0

- Income tax expense 4.810 3.146 4.446

Cash flow from operating activities before changes in net operating current assets 74.559 70.633 86.730

Change in trade and other receivables -10.669 -22.693 3.955

Change in inventories -54 5.317 18.310

Change in provisions 1.719 -1.612 -421

Change in trade and other payables 17.505 17.304 -28.434

Change in net current assets and provisions 8.501 -1.684 -6.590

Interest paid -15.033 -12.741 -12.072

Income tax paid -5.223 -3.689 -4.446

Net cash from operating activities 62.804 52.519 63.622

B. CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of property, plant and equipment 2.510 5.582 14.757

Proceeds from sale of investment property 2.253 250 0

Interest received 913 935 253

Dividends received 136 215 492

Divestment of subsidiary 454 434 47.400

Acquisition of property, plant and equipment -59.412 -49.672 -36.220

Acquisition of investment property 0 -371 0

Acquisition of subsidiary without obtained financial assets -710 0 0

Acquisition of an associated company -1.530 -1.200 0

Other investments 2.149 2.469 2.893

Acquisition of intangible assets -23.819 -25.656 -26.313

Net cash used in investing activities -77.056 -67.014 3.262

C. CASH FLOWS FROM FINANCING ACTIVITIES

Borrowings/Repayment of borrowings 18.068 6.909 -64.505

Payment of dividends 0 -2.430 0

Net cash used in financing activities 18.068 4.479 -64.505

Net change in cash and cash equivalents 3.816 -10.016 2.379

Cash and cash equivalents at beginning of period 31.426 35.053 17.490

Cash and cash equivalents at end of period 35.242 25.037 19.869

56

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.