GORENJE GOSPODINJSKI APARATI D.D. (49/2018) Gorenje's own brand sales up in the first half of 2018

Podstawa prawna: Pursuant to the Rules and Regulations of the Ljubljana Stock Exchange, d. d., the Financial Instruments Market Act, the Corporate Governance Code for Joint Stock Companies, and in accordance with the provisions of the Code of Best Practice for WSE Listed Companies, the company Gorenje, d. d., Velenje, hereby makes the following announcement:

Issuer: Gorenje gospodinjski aparati, d.d. (short name: Gorenje, d. d.), Partizanska 12, SI-3320 Velenje, Slovenia

Announcement of the Supervised Information's is referring to Article 106, 112 and 113 of Market in Financial Instruments Act (ZTFI - Semi annual report).

Velenje, August 24, 2018 - In the first half of 2018, Gorenje Group generated EUR 602.3 million of sales revenue, which is, on comparable terms (after elimination of revenue from coal trade operations divested at the end of 2017), on a par with the figure for the last year's equivalent period. We generated nearly 84 percent of sales revenue in our core activity of Home Appliances (EUR 504.5 million). Revenue from sales under our own brands increased by 3.2 percent while revenue from OEM deals was down. Consistently with our strategy, we continue to boost sales of premium products under the Asko brand and invest in new product development and marketing activities. Hisense Group announced its takeover bid and completed the acquisition of - combined with previously acquired shares - a total of 95.42 shares of the company Gorenje.

Bottom line for the first half is EUR 0.4 million, which is a decrease relative to last year's first half; however, Gorenje Group generates most of its profits in the last quarter. Our dynamic plan for the first half also included the proceeds from divestment of Gorenje Surovina; however, the divestment process was not completed by the end of June. The first half was also challenging for our competitors in the home appliance industry, who mostly also saw their sales and profits drop due to harsh macroeconomic conditions, volatility of some currencies, and relatively high raw material prices.

In addition to stringent competition, sales in our core activity were also affected in many markets by uncertainty related to the process of search for a strategic partner. This had a particularly strong impact on our collaboration with OEM partners and as a result, the scope of OEM deals was down by a good third. Adjusting for the negative effect of the OEM business, revenue from the Home Appliance activity would have increased by 2.3 percent. Without such adjustment, comparable first-half revenue is approximately the same as last year and it amounts to EUR 504.5 million (0.6% less than in the first half of 2017).

Sales increased especially in the markets of Western and Central Europe, while our activities of repositioning in terms of pricing, changes in the structure of sales channels, and harsh competition resulted in slightly lower sales in Germany, the Netherlands, Russia, and Serbia. We also boosted our sales in some markets of Eastern Europe, as well as in Brazil, Chile, and China.

In Australia, our revenue was strongly affected by depreciation of the local currency; nevertheless, our global sales of premium appliances under the Asko brand increased by 9.4 percent. Adjusting for the depreciation of the local currency, our Asko revenue would have increased by 11.5 percent. We also increased our sales of innovative appliances. Their share in the structure of sales revenue from major domestic appliances increased to 22.1 percent.

We continue to increase strategically important investments into development of new products, for which we earmarked 2.7 percent of total Gorenje Group revenue in the first half of this year. We have already launched most of the products from the new generation of Gorenje WaveActive washing machines and dryers, new premium and semi-professional dishwashers, free-standing cookers under the Asko brand, and the updated line of glass ceramic cooking hobs. We have also updated our offer of premium built-in ovens. Consistently with our strategic plan, we slightly increased our investments into marketing activities, allocating 2.2 percent of total Group revenue for them in this year's first half.

Disclaimer: The English text for all announcements is for information purposes only!

The information in this announcement will be available on the official web site of the company Gorenje, d. d., Velenje, Slovenia, www.gorenjegoup.com, for at least 10 years from the date of this announcement.

Gorenje, d. d.,

The Management Board

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