BOSTON Slovenia-based electronic appliance maker Gorenje Group expects slight growth and lower profitability in 2008 as the financial crisis impacts Eastern Europe.
Revenues are forecast to reach 1.33B euros ($1.89B), up from 1.29B ($1.83B) in 2007, the company said in a statement.
The Group's net profit is expected to be 17.7M euros ($24.8M), down 25% from 2007.
Gorenje is Europe's third largest home appliance maker. Selling under its own brand name, the company earns 39% of revenues in Eastern European markets.
The economic downturn has hit the white goods industry hard. Household appliances are the first item the consumer cuts back on in a recession, the company said.
In addition, European financial institutions have cut consumer credit and have curtailed financing to retail partners of Gorenje in Eastern Europe.
Complicating the picture are local currencies in Croatia, the Czech Republic, Poland, Hungary and Serbia, which have plunged in relation to the euro. Gorejne has some manufacturing operations in Slovenia, which uses the euro currency.
Management is predicting 0.2% revenue growth for 2009, but the outlook is so uncertain that the company expects to revise the figure each quarter.
The company said a favorable trend toward price decreases for raw materials, which make up 60% of production costs, will help to offset expected slower sales in 2009.
Gorenje also expects to undertake several cost-cutting measures, including a reduction of the work week to 36 hours, chopping executive salaries by 10% next year and lowering investment targets.
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