2000-01-19 00:00:00.0

Andrea Guerra appointed new Chief Executive Officer

Operating margin of 5% achieved in 1999

"Rome, January 19, 2000 - Vittorio Merloni has informed the company Board of Directors that, having reached the end of his three-year mandate, Francesco Caio has expressed an interest in launching a number of new business initiatives, including one that Merloni Elettrodomestici will set up in the field of digital technology. In line with the Chairman's proposal, the current Chief Operating Officer of the Company, Andrea Guerra, was co-opted onto the Board and appointed Chief Executive Officer. At 34, Andrea Guerra is one of youngest executives to hold such a position in a public company in Italy. He has been with Merloni since 1994 and has held a number of roles of increasing responsibility in the areas of sales, manufacturing and central services. The Company's new Chief Operating Officer will be 45-year-old Marco Milani, who has been with the Company since 1980, and has held responsibility both in Italy and, during the last five years, in a number of overseas countries. The Board also approved the 'spin-off' of activities related to the development of digital technology, and its application to Ariston Digital appliances, to be called WRAP Inc. (Web-Ready Appliances Protocol). This newly-formed company is based on a technology developed by Merloni, enabling appliances to exchange information with each other and with telecommunications networks, in particular with the Internet. The Board has given its mandate to Francesco Caio to complete the start-up of the new company in the role of Vice-President and future shareholder. Over the next few months Mr Caio will also be taking the lead of a venture in the European telecom field with Vittorio Merloni among the project's financial backers. ""I am extremely grateful to Mr. Caio, who will continue to sit on the company Board of Directors, for his contribution and the results he has obtained,"" commented Vittorio Merloni. ""During this period the Company has established a sound managerial structure and laid the foundations for future growth."" ""I am confident that Andrea Guerra and Marco Milani, with their excellent personal and professional qualities and extensive knowledge of the company, will be more than capable of guiding Merloni toward the strategic development objectives we have set for ourselves for the next few years."" The Board also examined the preliminary financial data for 1999. At year end, the Company achieved marginal volume growth by consolidating market shares in Western European markets, while at the same time Eastern European markets are still undergoing the effects of the economic downturn. As a result, the Company sustained an overall setback of approximately 3% versus last year's revenues. Through a reduction in manufacturing costs and overheads, Merloni Elettrodomestici, achieved andoperating margin of 136 billion lira (70.242 million Euro), representing 5% of total sales, an increase of one percentage point over 1998. Net debt, now below 200 billion lira (about 103 million Euro), has been further reduced since 1998, in spite of the increase in manufacturing investments during the year amounting to 175 billion lira (90.386 million Euro). The 1999 financial statement, which is still undergoing certification, indicates before-tax profits that should be broadly in line with those of the previous year, in spite of extraordinary reorganization costs amounting to 24 billion lira (12.396 million Euro). "

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