March 9, 2018 / 3:55 PM / 5 months ago

Slovenian Gorenje's 2017 profit drops as it lines up investors

LJUBLJANA, March 9 (Reuters) - Slovenian household appliance maker Gorenje reported a sharp drop in 2017 net profit on Friday, only days before it is expected to choose one or more investors that will be allowed to perform due diligence on the company.

It said 2017 group net profit fell by 84 percent to 1.3 million euros ($1.6 million) while sales increased by 4 percent to 1.3 billion euros.

“Our business in the second half of the year and especially in the last quarter (of 2017) was affected by lower sales than planned, strong competition in the Western Europe, labour cost pressures, higher cost of supplies and high production costs linked to the start of production of new products,” the company said in a statement.

Gorenje also said on Friday a strike at its Slovenian factory which was planned for March 14 had been called off after management and Gorenje’s trade union agreed to continue negotiations on labour rights with the aim of reaching an agreement by April 20.

Last year Gorenje, which has market capitalisation of about 142 million euros and is among Slovenia’s largest exporters, said it was seeking a strategic partner to improve cost efficiencies and strengthen the brand.

On Thursday Gorenje said it had received four non-binding bids from Asia to form a strategic partnership, adding the next step in the process will be announced on March 15.

It did not name the bidders but Slovenian daily newspaper Finance said on Friday they included Chinese household appliance makers Haier and Hefei Meiling, citing unofficial sources.

Japan’s Panasonic , which has looked at making a takeover bid for Gorenje, decided against the idea in November 2016. It owns almost 11 percent of the company. ($1 = 0.8134 euros) (Reporting By Marja Novak, editing by David Evans)

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