VILNIUS - Rumors that Snaige will soon be sold intensified over the week, with reports surfacing that the company has ordered a due diligence report and the CEO admitting that the household-appliances industry is on the verge of consolidation. Snaige, the only manufacturer of refrigerators in the Baltics, has seen its financial performance hit the skids due to problems on the Russian market, and now its core owner, the investment firm Hermis Capital, has apparently decided to search for a new strategic investor.
CEO Mindaugas Sestokas told the Verslo Zinios daily that market forces were nudging smaller players without a strong trademark to look for strategic investors in order to achieve economy of scale and compete with cheap imports.
Sestokas said that sooner or later the household appliances manufacturing sector would consolidate, which would boost competitiveness amid growth in raw material prices.
He expressed confidence that investors would materialize. "Snaige runs a solid trading platform in the East, including Russia, Kazakhstan, the Baltic countries, Ukraine, which should be of interest to investors," he said.
The company expects that it will receive the first offers for a majority holding in June. The price of the stake was not divulged.
Prospective bidders might include financial investors, and Verslo Zinios wrote that a leading European producer of household appliances would submit a bid.
Earlier media reports indicated that Slovenia's Gorenje might be interested. Other major European producers of household appliances include Electrolux, Bosch Siemens, Indesit and Whirlpool.
Snaige reported to the Vilnius Stock Exchange that it has begun due diligence work and that executives were holding talks with potential buyers. Company executives refused to provide additional information.
Meanwhile, the company's financial woes continued. Snaige reported 2.5 million litas (740,000 euros) in pretax losses for the first three months of 2007, down from a pretax profit of 844,400 litas a year earlier. Consolidated net losses plunged to 3.8 million litas.
On the bright side, three-month revenues soared 39 percent to 72.6 million litas, compared with 52.2 million litas a year earlier.
For 2006 the Snaige group reported 10.1 million litas in consolidated losses due to difficulties on the Russian market. Snaige alone turned 10.6 million litas in audited net profit.
Survesta, a subsidiary of Hermis Capital, owned a 21.3 percent stake in Snaige as of late 2006.
