Gorenje Sells Furniture Subsidiaries to CoBe

Between them, Gorenje Kuhinje, maker of kitchen cabinets, and Gorenje Pohištvo, maker of furniture, employ nearly 400 people.

CoBe Capital intends to keep production running at three locations, according to the press release from Gorenje. The core company said it would continue to sell the kitchen cabinets manufactured in Gorenje Kuhinje.

The sale will improve free cash flow and profitability of the group, Gorenje management member Peter Groznik said. Gorenje has not disclosed the value of the transaction.

The furniture makers have been generating loss for four consecutive years which was a heavy burden for the group.

Gorenje CEO Franjo Bobinac said that CoBe Capital was a "partner who would enable development of furniture production in Slovenia and preserve jobs". "Gorenje will continue to contribute by preserving kitchen cabinets in our sales programme."

CoBe Capital managing director Neal Cohen underlined that they saw great potential in the two companies due to quality manufacture, design and efficient facilities enabling competitive cost structure.

He said the CoBe Capital could not have been more happy with its first takeover in Slovenia.

CoBe Capital managing director for Europe Henning Walf added that Gorenje needed a strategic partner dedicated to preserving high quality standards. Walf also said that Gorenje furniture complemented the Warendorf brand.

He said that CoBe Capital would work closely with the managerial teams at Gorenje Kuhinje and Gorenje Pohištvo to consolidate their financial and operational base and boost growth on European and other markets.

Gorenje today also denied reports by the daily Večer that it was building a new refrigerator factory in Serbia in a joint venture with Panasonic. The deal was said to be worth EUR 70m and the plant would allegedly employ 1,400 people.

Gorenje already has three plants in Serbia employing 1,100 people. Gorenje's total investments in Serbia amount to some EUR 70m.

Previously, trade unions at Gorenje expressed concern that the group would try to outsource jobs from Slovenia to Serbia, which was denied by the management. It has maintained that production in Serbia will focus on lower value products, with Slovenia being a base for high value added products.