CEWE clearly on track to reach targets after Q3

  • Turnover increases by 8.9% to 423.2 million euros (Q1-3 2018: 388.8 million euros)
  • CEWE PHOTOBOOK exceeds expectations for growth in Q1-3
  • CEWE optimally prepared for Christmas business: CEWE PHOTOBOOKS, CEWE CALENDARS and other photo products make ideal, very personal Christmas gifts

CEWE Stiftung & Co. KGaA (SDAX, ISIN: DE 0005403901) is clearly on track to achieve its corporate targets for 2019 thanks to a positive development in sales and earnings in the first three quarterly periods: Group turnover increased by 8.9% (34.4 million euros) in the first three quarters, to 423.2 million euros. EBIT improved in this period by 73.2% to -0.6 million euros (Q1-3 2018: -2.4 million euros). “The first three quarters exceeded our expectations, since our core business segment of photofinishing in particular is growing strongly. We are well-prepared for the anticipated seasonal peak in the fourth quarter,” emphasises CEO Dr. Christian Friege. Christmas business, which has been expanding for many years, traditionally contributes the entire amount of annual net income. This is how CEWE is right on track to reach its targets: Group turnover is to increase to a range between 675  and  710 million euros, Group EBIT is to be in a corridor of 51 to 58 million euros, EBT between 50.5 and 57.5 million euros and after-tax earnings between 35 and 39 million euros.

Photofinishing: Considerable increase in turnover and strong CEWE PHOTOBOOK sales

The development of the core business segment of photofinishing was decisive for the positive development in the first three quarters: at 316.9 million euros, turnover was 12.9% higher than in the same period of the previous year (Q1-3 2018: 280.8 million euros). The acquisitions of Cheerz and WhiteWall as well as organic growth contributed to this success. The CEWE PHOTOBOOK in particular made a decisive contribution in this case: in the first three quarters of 2019, sales grew to 3.97 million books sold – an increase of 7.6% (Q1-3 2018: 3.69 million books sold), which exceeded the expectation for an increase of 1-2 %. The 60 millionth CEWE PHOTOBOOK was also delivered in the quarter of the report – to a customer in Austria. The development in sales of brand-name products CEWE WALL ART, CEWE CALENDARS and CEWE CARDS was similarly positive. In spite of the contributions to earnings from the latest acquisitions, which remained negative as budgeted, in the first three quarters EBIT improved overall, to 3.2 million euros (Q1-3 2018: 2.2 million euros). The trend towards high-quality photo products was maintained unchanged: in Q1-3, turnover per photo rose by a considerable 5.6%, to 21 eurocents (Q1-3 2018: 19.88 eurocents).

Commercial Online-Print develops positively despite difficult market conditions

In a difficult market environment, CEWE was able to increase its sales in the business segment of commercial online printing for the first three quarters, by 2.8% to 75.1 million euros (Q1-3 2018:

73.0 million euros). This saw the generally high price pressure and in particular the LASERLINE price positioning dampening growth. Commercial online printing improved its contribution to consolidated income overall in the first three quarterly periods, by a respectable 1.3 million euros, with EBIT at -2.3 million euros (Q1-3 2018: -3.6 million euros).

Hardware sales in retailing to be further reduced as scheduled

Retail hardware sales will be further reduced as scheduled on the basis of the focus on photofinishing business and of abandoning low-margin hardware business, in particular business with cameras. In the first three quarters, this line of business, at 31.2 million euros, fell short of the same period of the previous year by 10.9% (Q1-3 2018: 35.1 million euros). In spite of a significant reduction in sales, the retail contribution to earnings was maintained at the same level as that of the previous year, with EBIT at -0.77 million euros (Q1-3 2018: -0.79 million euros). Retailing also traditionally earns its annual net income in the fourth quarter. The turnover achieved with photofinishing products in retailing, which is growing, is reported in the photofinishing business segment.

Positive outlook for Christmas business in Q4

The Christmas business conducted in the fourth quarter is traditionally crucial for CEWE’s annual net income. The high-quality brand-name products have been established as ideal, most personal Christmas gifts. This year again, CEWE is thus presenting many new products as photo gifts in time for the Christmas season, examples being the CEWE PHOTOBOOK with leather or canvas binding, or with hardcover enhancements with pink gold and calendar gift packages. “Our customers appreciate the individuality just as much as the feel of the surface of our products – and not least of all, they also appreciate our perfect service. With the current financial year developing so positively, we expect Christmas business that ensures that we once again meet all our corporate targets. Besides, given the good run-up period, we only need earnings to grow by 0.5 million euros in the fourth quarter in order to actually reach the top end of 58 million euros in our EBIT target corridor”, says Dr. Friege.

Sound capital ratio, ROCE at a pleasing 15.8%

The capital ratio was at a sound level of 46.2% as at 30 September 2019 (30 September 2018: 52.6%). This figure would even have risen to 52.8% without a balance sheet extension of around

64.5 million euros based on IFRS 16 (lease accounting). The return on capital employed (ROCE) as a key performance indicator for a return on assets improved by a pleasing 15.8% as at 30 September 2019 (30 September 2018: 15.0%). The ROCE would have even reached 18.2% without the IFRS 16 balance sheet extension. CFO Dr. Olaf Holzkämper: “Our financial situation is sound throughout across all our performance indicators. This enables us to continue to improve our business segments in future as well and to invest when this is reasonable. This corporate strategy benefits our employees, our customers and not least our shareholders. We thus wish to maintain the tradition of our year on year dividend increases.”

Earnings per business segment in Q3 and the first nine months of 2019

CEWE Unit Q3 2018 Q3 2019 Q1-3 2018 Q1-3 2019
(1) Photofinishing          
Photos in million units 513.7 549.6 1,412.0 1,508.9
CEWE PHOTOBOOK in thousand units 1,322.7 1,406.9 3,691.7 3,972.8
Turnover in millions of euros 100.5 116.2 280.8 316.9
EBIT in millions of euros 2.6 1.4 2.2 3.2
Purchase price allocation effects in millions of euros -0.6 -0.7 -1.6 -1.8
Revenue from the operation in Nuremberg in millions of euros 1.2 1.2
Non-recurring costs for the presentation at photokina in millions of euros -1.3 -1.3
EBIT before one-off effects in millions of euros 3.3 2.1 3.9 5.0
(2) Retail          
Turnover in millions of euros 11.8 10.2 35.1 31.2
EBIT in millions of euros -0.1 -0.1 -0.8 -0.8
(3) Commercial Online-Print          
Turnover in millions of euros 23.9 24.8 73.0 75.1
EBIT in millions of euros -1.8 -0.8 -3.6 -2.3
Purchase price allocation effects in millions of euros -0.2 -0.1 -0.7 -0.5
LASERLINE integration costs in millions of euros -0.3 -0.8
EBIT before one-off effects in millions of euros -1.2 -0.7 -2.0 -1.8
(4) Other          
Turnover in millions of euros 1.0 1.4 2.8 4.0
EBIT in millions of euros -0.7 -0.3 -1.7 -1.5
CEWE Group Unit Q3 2018 Q3 2019 Q1-3 2018 Q1-3 2019
Turnover in millions of euros 136.2 151.2 388.8 423.2
EBIT in millions of euros 0.6 0.2 -2.4 -0.6
One-off effects in millions of euros -1.2 -0.8 -3.2 -2.3
EBIT before one-off effects in millions of euros 1.9 1.0 0.8 1.7
EBT in millions of euros 0.4 -0.3 -2.6 -1.4
Earnings after tax in millions of euros 0.4 0.5 -1.5 0.1

Rounding differences may occur.

Notes to reported figures

The CEWE Group turnover described here and the Group EBIT have been shown excluding Group company futalis, which is held for sale and is nevertheless still included in the “Other” business segment as a “discontinued operation” in the segment reports for the current reporting period and for the figures for the previous year pursuant to IFRS 5.

Figures for the previous year have been adjusted due to the finalization of the purchase price allocation for Cheerz and Laserline, the companies acquired in 2018.

Notes to the “Earnings by Business Segment” chart

  • Production and sale of photo products such as CEWE PHOTOBOOKS, CEWE CARDS, CEWE CALENDARS, CEWE WALL ART and individual (analogue and digital) photos as well as other photo products
  • Trading in photo hardware, such as cameras and lenses, in Norway, Sweden, Poland, the Czech Republic and Slovakia
  • Production and sale of commercial print products in the online printing portals, e.g. CEWE-PRINT.de, SAXOPRINT, Viaprinto and LASERLINE