Slovenian household appliance manufacturer Gorenje Group reported declines in both net profits and revenues in H1. 

Gorenje has been going through a major transition after China's Hisense Electric Co completed the acquisition of a 95.42% stake in it in the summer. Gorenje selected Hisense as its strategic partner in May. The Slovenian white goods manufacturer wanted a partner that would support its long-term and sustainable growth and development. 

However, the company considers this process contributed to a fall in revenues in the first half of the year. In January-June, the group recorded a 3.5% decline in revenue relative to the balance recorded in the same period in 2017, though in terms of comparability revenue remained approximately on the last year’s level (a decline of 0.1%).

A higher sales volume for domestic appliances was achieved in Eastern Europe, while it slightly declined in other countries. Lower revenue was also generated in Western Europe, reads Gorenje’s report posted on the website of the Ljubljana Stock Exchange.

“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,” Gorenje said on August 24.

Meanwhile, the group’s net profit dropped to €400,000 in H1, which was just 9.9% of reached €4.4mn in H1 2017 when it went 111.8% up against the same quarter of 2016, the company announced on August 24 in its latest interim semiannual report.

Gorenje says the decrease in net profit relative to the dynamically planned profit for this period (€2.3mn) is to a large extent attributable to postponing the divestment of the company Gorenje Surovina to the second half-year of 2018. The positive effects of the divestment (€7.1mn) were in the plan for the second quarter of 2018.

The divestment of Surovina was postponed as the Slovenian Competition Protection Agency launched proceedings against Surovina and one of its competitive entities due to alleged violation of provision of the Prevention of Restriction of Competition Act, Gorenje said in its semi-annual report.

Gorenje Group reported a net profit of €8.4mn in 2016, a significant improvement against the €8mn loss recorded in 2015.